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Personal Loan for Government Employees

By Finserv MARKETS - Mar 7,2019
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Personal Loan for Government Employees

Personal loans are a single solution to many financial problems. Be it a medical emergency, unexpected house repairs, long-term treatment, vacation, or any other expense, a personal loan can help cover all. In India, most of the banks offer personal loans for government employees. The loans have many advantages such as low-interest rates, no security loans, no prepayment penalty, lower processing cost, and minimal documentation. These facilities are specially offered to government employees.

Eligibility criteria for personal loans for government employees

  • The borrower must be within the age bracket of 23-55 years
  • The minimum income of the borrower must be INR 20,000 per month
  • The work experience for these borrowers must be a minimum of six months
  • The borrower must have a credit score above 700
  • Visit our section, personal loan eligibility for more details.

What are the documents required for personal loan for government employees?

  • A duly filled up application form
  • A valid age and photo identity proof
  • A valid address proof
  • Payslip for the past six months

What is the rate of interest applicable to personal loans for government employees?

The interest rate charged for government employees is 11.35% p.a. This rate is lower than that charged to the private sector employees. Some of the other benefits include zero processing fees for defense employees and low processing fees for public sector bank employees. Overall, the rate of interest ranges between 11.35% p.a. – 16% p.a.

Various categories of government entities

Let us have a look at the special categories of government entities that can enjoy special privilege when it comes to personal loans.

1.Central government undertakings

These are companies, in which the government enjoys a 51% stake. The personal loan for employees working in the central government undertaking is 11.6% p.a.

2.State government Undertakings

The rate of interest on Bajaj Personal Loan for state government employees varies across financial institutions. Just like central government employees, the interest rates start from 11.6% p.a. for these employees as well.

3.Maharatna Public Sector Undertakings (PSUs)-

To be classified as a Maharatna PSU, an entity must fulfil the following criteria:

  1. The annual turnover should be more than INR 20,000 crore in the past three years
  2. An annual net worth of INR 10,000 crore
  3. The entity must have the ability to raise investments in the range of INR 1,000 crore to INR 5,000 crore. BHEL, ONGC, Coal India, GAIL, NTPC, Steel Authority of India, and Indian Oil Corporation are the seven companies in the government sector that come under this category. The personal loan interest rates for these companies are lesser than those of private sector employees.

4.Navratna PSUs

The personal interest rates for companies in the Navratna PSUs begin from 11.49% p.a. Companies are classified as Navratna Companies based on seven parameters:

  1. Net Worth
  2. Net Profit
  3. Total Manpower Cost
  4. Cost of services
  5. Cost of production
  6. Capital employed
  7. Profit prior to depreciation

Currently, there are 17 Navratna Companies.

5.Public sector banks

The government holds a majority stake in these banks and financial institutions. The shares of these banks are listed on the stock exchanges and at present, there are 19 nationalized banks. The interest rate for personal loans varies across banks for this sector.

6.Defence personnel

We owe a lot to our army men and the paramilitary personnel. They have been given special privileges in a couple of things as a gesture for the unparalleled contribution to the country. Anyone who belongs to the Indian Army, Navy, or Air Force will be eligible for a Personal Loan at special rates. The interest rates are decided based on the ranks and designations of these officers. There are some banks and financial institutions, which also offer these loans to police personnel.

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Also, read about the personal loan procedure.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522