Loan Basics: Wooing women borrowers

If you are looking to avail a loan for buying a home or starting your own enterprise, and you belong to the fairer sex, there’s more reason to cheer as many banks offer concessional interest rates.

The country’s largest public sector bank State Bank of India has a dedicated scheme for women home buyers — HerGhar. The scheme is open to both salaried and self-employed women.

If you in a salaried job and are looking to avail a loan of up to ₹30 lakh from SBI, you are eligible for a concessional rate of 8.3 per cent. This is 0.05 per cent lower than the 8.35 per cent interest currently offered to salaried men.

For instance, if you are looking to borrow ₹30 lakh and expect to repay it over 20 years, the interest saving on account of the 0.05 per cent concession is about ₹23,000. The total interest outflow over the 20-year period for a women is ₹31.57 lakh, compared to ₹31.80 lakh for others.

For loans exceeding ₹30 lakh and up to ₹75 lakh, SBI offers an interest rate ranging between 8.30 per cent and 8.35 per cent for women, compared with 8.35 to 8.4 per cent for others. The concession translates to interest saving of ₹50,000 if you consider the same 20-year period.

For loan of over ₹75 lakh, the interest rate for employed women ranges between 8.4 and 8.45 per cent, compared with 8.45 per cent to 8.5 per cent for others. The interest outgo saving on a ₹1-crore loan, considering a 20-year loan tenure, amounts to ₹75,000.

The interest rate for self-employed women is higher compared to salaried women. However, it is still lower by 0.05 per cent compared to other non-salaried customers. For loans up to ₹30 lakh, the interest rate is 8.4 per cent for women, vis-à-vis 8.45 per cent for others. In case you plan to avail a loan of over ₹30 lakh but not exceeding ₹75 lakh, the applicable interest rate is 8.45 to 8.5 per cent. This is 0.05 per cent lower than the 8.5-8.55 per cent offered to others. For self-employed women seeking a loan in excess of ₹75 lakh, SBI charges 8.5 to 8.55 per cent as interest. Here again, other customers can avail the loan at a higher 8.55 to 8.6 per cent. SBI also offers the option to keep the interest rate fixed for a period of two years. In this case, the applicable interest on a two-year fixed loan for women borrowers stands at 8.5 per cent vis-à-vis 8.55 per cent for others.

HDFC Bank offers 8.35 per cent to women applicants for loans up to ₹30 lakh, which is 0.05 per cent lower compared to rates for others. For loans ranging between ₹30 lakh and ₹75 lakh, the interest rate is 8.4 per cent vis-à-vis 8.45 per cent for others. For loan amounts exceeding ₹75 lakh, the interest rate is 8.45 per cent for women applicants, compared with 8.5 per cent for others. LIC Housing Finance offers rates ranging from 8.35 per cent for loans up to ₹25 lakh for women applicants going up to 8.5 per cent on loans exceeding ₹25 lakh up to ₹1 crore.

Besides concessions on the interest rate, some banks also offer concessions on the processing fee. LIC Housing Finance offers 50 per cent discount on the processing charge for women applicants. For salaried and self-employed women, the processing fee is ₹2,500, compared to ₹5,000 for others. (Service tax is extra.)

Usually, the concession is available only if the loan is either applied solely or jointly by a woman. Likewise, the property should either be solely or jointly owned by the woman applicant.

If you are looking to expand your business or start your own venture, you can consider the special schemes offered by banks for business loans. Cent Kalyani by Central Bank of India, Udyogini Scheme by Punjab and Sind Bank, Dena Shakti Scheme by Dena Bank and Mahila Udyam Nidhi Scheme by Punjab National Bank are some of the schemes you can explore, depending on the nature of the business and capital requirement.

Central Bank of India under the Cent Kalyani scheme offers waiver on the processing fee. It also offers collateral-free loan of up to ₹100 lakh. Likewise, under the Mahila Udyam Scheme, Punjab National Bank offers flexibility to repay the loan over a period of 10 years. Udyogini Scheme by Punjab and Sind Bank offers loans to women entrepreneurs who are also into agriculture and small businesses.

Dena Bank under its Dena Shakti Scheme offers a 0.25 per cent concession on loan for women borrowers.

The writer is co-founder, RaNa Investment Advisors

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