Top 7 Personal Loan Offers for Indian Pensioners

Updated on: 18 Jan 2024 // 8 min read // Personal Loans
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Our lifestyles have gone for a complete overhaul and a lot of us love spending on a good vacation or getting an expensive villa to live in. In fact, once you are retired, it becomes even easier to take life as it comes. Your children have settled or there are no urgent responsibilities for you. You do not have to go to work anymore, which means, you have all the time in the world to live a good life.

You can now plan to go on that vacation or that luxury cruise you have always dreamt of. However, in order to make these dreams come true, you need to have a steady flow of cash. Retirement, however, does not give you a promise of constant cash income which is why Personal Loans for Pensioners can come to your rescue!

Personal Loans for Pensioners:

The most common idea that people have about a Personal Loan is that only salaried individuals in their working life can apply for unsecured loans. However, thanks to the changing times and trends, even senior citizens or retired personnel who get a steady pension from the bank can apply for a Personal Loan.

If you fall in the category of a senior citizen looking out to spend the rest of your life in utter luxury, you have come to the right article. We have pulled out some of the best Personal Loans for retirees and pensioners in India. We have also listed the associated advantages so that you can make an informed decision and choose the best pension loan scheme from the best pension loan providers in India.

1. Bank of India Star Pension Loan Scheme:

Bank of India Star Pension Loan Scheme is a very popular pension loan product. In order to be eligible for this Personal Loan for retired persons, you:

  • Should be drawing a regular monthly pension from any branch of the bank across the country
  • Should be a retired employee and not dismissed or compulsorily retired.

Loan amount: If your pension account is with Bank of India, you can get a Personal Loan, which is 15 times your monthly pension, and the maximum amount you can get is Rs. 5 Lakhs. In case, you have a pension account in another bank, your loan amount can be maximum of Rs. 3 Lakhs.

The loan can be raised as a demand loan, term loan, or overdraft facility. Basically you get easy loans against regular pension assurance from your bank.

For individual/ family pensioners above 75 years, Maximum Limit for loan is Rs.1 Lakh.

The applicant may be required to raise two loans— secured and unsecured loan. The limit for both secured & unsecured is the maximum of Rs.50000, subject to 3 times the net pension less EMI or other liabilities for Loans.

Interest rate: 1 year MCLR + 2.5% p.a.

At least 40% of pension amount should be left to take home after deducting loan instalment.

2. State Bank of India Pension Loan Scheme:

State Bank of India Pension Loan Scheme is available for retired employees of the central or state governments.

Loan amount: There are no processing fees and hidden charges for this loan. The minimum sanction amount is Rs. 25,000 and it can go up to Rs. 14 Lakhs depending on the type of pensioner– a defence personnel, former central or state government employee or a family pensioner. 

(a.) Central or State Government Pensioners

  • The minimum age should be less than 76 years.
  • Pension must be submitted in SBI account.
  • The pensioner must agree to not change the treasury during the loan tenure.
  • A written consent is generated by treasury stating that the pensioner cannot transfer pension payment to other banks till a NOC is issued.
  • A third party guarantee or a guarantee by the spouse (part of family pension) may be required.

(b.) Defence Pensioners

  • Pensioners who served Armed Forces, Paramilitary Forces, or Coast Guards, Rashtriya Rifles and Assam Rifles are eligible.
  • Pension is submitted in SBI Account.
  • Minimum age bar is removed for defence pensioners.
  • Maximum age should be below 76 years.

(c.)Family Pensioners

  • Family pensioners are those who are authorized family members of the pensioner to receive pension benefits.
  • The maximum age for pension loan is 76 years.

Interest rate: 11.85 to 12.35 % per annum

3. Central Bank of India Pension Loan Scheme:

Central Bank of India offers different types of loans for retired pensioners. These are:

(a.) Cent OD facility for Pensioners:

The overdraft facility from Central Bank of India for pensioners is ideal for anyone who is looking out for Personal Loan for retired person. All individual and family pensioners who draw pension for Central Bank, including the ex-employees of Central Bank can apply for Cent OD. Besides, the spouse or the legal heir of the pensioner must co-borrow with the pensioner.

Amount: The credit can be raised for up to 18 months of pension amount or the maximum of 10 Lakhs. The OD can be paid off within 60 months at diminishing DP. The rate of interest is attractive at MCLR+ 1.50 % p.a.

(b.) Cent Swabhiman Plus:

The Cent Swabhiman Plus is reverse mortgage loan for Pensioners. The applicant can apply for lump-sum amount against the primary residence that s/he owns or resides in. The age limit to apply is 60 to 99 years. Besides the loan, a life time annuity is also bought for the borrower. The loan is not payable until the death of the last survivor or when they decide to sell the home. The loan can be prepaid without any foreclosure charge.

The interest rate is 12 months MCLR + 0.5 % p.a. Processing fee is minimal at 0.15% of the loan, ranging between Rs 500 to Rs 10000.

(c.) Cent Swabhiman:

Cent Swabhiman is a Secured Pension Loan to streamline a regular income to pensioners above 60 years of age. To use this facility the applicant should be owner and residence of the property for at least 20 years. The co-owner of the property act as co-borrower. The loan can be raised for 75% of the market value of property, subject to the maximum of Rs 1 Crore. This is also a reverse mortgage loan facility for senior citizens.

The rate of interest is MCLR +2 % p.a. The loan can be drawn for a maximum of 15 years or till the death of the last surviving spouse/ co-borrower. On solely of bank’s discretion, the tenor can be extended to 20 years. For applicants between 60 to 70 years, the maximum loan tenure is 15 years and while for applicants between 70 to 75 years, the loan tenor is 10 years.

The monthly disbursals cannot be more than Rs 50000, and the lump sum disbursal could be a maximum of Rs 15 Lakhs.

(d.) Cent Pensioners

All senior citizens who are drawing a pension from Central Bank are eligible to apply for Cent Pensioners scheme. In addition, retired people receiving their salaries through government treasuries can also apply for this loan.

Loan amount: Pensioners who are below the age of 75 years can get a loan for up to 18 months of pension amount, or the maximum of 5 Lakhs; while for those above the age of 75 years can draw loan up to 12 months of pension amount, or the maximum of Rs. 2 Lakhs.

4. PNB Personal Loan Scheme for Pensioners:

All senior citizens who are drawing a pension from the bank can get this loan.

Loan amount: The best part about PNB Personal Loan for Pensioners is that the margin fee and processing fee is zero. Under this loan scheme, the minimum amount that can be financed is Rs. 25,000, however, the maximum amount is 18 times the net monthly pension (and the same amount is 20 times in case of the defence pensioners). Here are the ceilings:

10 Lakhs or 18 months of monthly pension: for up to the age of 70 years.

7.5 Lakhs or 18 months of monthly pension (20 times for defence pensioners): for up to the age of 70 years and 75 years.

5 Lakhs or 12 months of pension: for those above 75 years of age.

Interest rate for Overdraft/ Term Loan/ Direct Loan: Base Rate + 2.5 %

A spouse or a third party guarantee is required. EMI should not exceed 50% of the pension amount. The maximum repayment tenure could be 60 months. For pensioners above 75 years of age, the maximum EMIs are capped for 24 months.

5. Bank of Baroda Personal Loan for Pensioners:

All senior citizens who are drawing a pension from Bank of Baroda are eligible for this loan.

Loan amount: For those who already have an account with Bank of Baroda, they will not have to pay any processing fees, but for others, there is a processing fee of Rs. 1,000. The maximum loan that a pensioner can get is 18 times their pension and is actually dependent on the age of the loaner. If you are up to 70 years, the maximum amount offered is Rs. 8 Lakhs, and if you are above 70 years of age, the maximum loan amount that can be drawn is capped at Rs. 3 Lakhs.

Interest rate: 11.70%-14.70%

Tenure: The loan can be raised for the maximum of 60 months.

6. Allahabad Bank Personal Loan Against Pension

Every former State and Central government employee who gets a pension in his or her Allahabad Bank Account is eligible for this loan. The only issue is that you will get the loan if you are below 73 years and the loan needs to be rapid by the time you are 75.

Loan Amount: The minimum amount is Rs. 25,000 and the maximum amount is Rs. 6 Lakhs up to the age of 65 years. You can repay the loan in a period of 48 months.

Interest rate: 8.65%-10.65%

A pensioner is eligible to apply for Allahabad Bank Saral Loan and AllBank Suvidha Loan. A personal guarantor may be required for these products.

7. ICICI Pensioners’ Loan:

ICICI Bank offers one of the lowest interest rates on personal loans to its customers. If you earn a pension and are a retired central government employee, you are eligible to apply for the attractive interest rates offered by ICICI Bank.

Loan Amount: If you are below the age of 75 years, you can get a Personal Loan worth Rs. 8 Lakhs.

Interest rate: 11.25% to 22%

These are some of the best Personal Loan offers for pensioners from the top pension loan providers in India. With the right product in your bag, you can live your life king size despite the receding years of life. Age is just a number for those who know how to celebrate their life. So whether you want to go for a dream vacation or buy a swanky car or want to realise some other life plans, make the most of your pension, assets, savings or bank deposits to get the most affordable online instalment loans for retirees.