A cheaper credit line for women

India’s first bank dedicated to women has been in operation since November 2013. What is in the Bharatiya Mahila Bank offering that is attractive?

For the most part, it is the lower interest rates on loan products. From car loans to home loans and education loans, women borrowers get to pay lower interest on their loans at the women’s bank.

While the bank employs men and also allows men to open an account, preference is given to woman borrowers and businesses targeted at women.

The bank started out by offering a loan of up to ₹5 lakh for kitchen renovation at the (current) rate of 12.25 per cent. It later expanded its loan product basket to include standard offerings, such as auto, home and education loans. Now the bank normally gives car loans at a 10.75 per cent interest rate. If either the borrower or one of the co-borrowers is a woman, the rate drops to 10.5 per cent. This is much cheaper than the 10.95 per cent interest rate on car loans offered by SBI to most borrowers

Similarly, in home loans too, women get a helping hand. The bank normally charges the base rate (currently 10 per cent) of interest on home loans if the loan amount is less than ₹30-lakh.

The rate increases by 0.25 per cent for loans up to ₹75-lakh and by 0.5 per cent above the base rate for amounts above that. But if the property is in the name of a woman, or the first name in a joint property is a woman's, the rate is reduced by 0.25 per cent.

The interest rate is identical to what SBI offers to women for loans over ₹75-lakh. But for amounts less than this, while SBI charges 0.1 per cent over the base rate for women, BMB charges only the base rate.

To boot, as part of the bank’s inaugural bonanza, BMB is waiving processing fees on car and home loans until March-end.

Women on the professional track, too, can look to the BMB for loans to pursue educational opportunities at home and abroad. Girl students pursuing CA and availing education loans are offered a 1 per cent concession in the rate of interest. A similar concession is available for women chartered accountants to set up their practice.

For studies in India, the maximum loan amount is ₹10 lakh and for study abroad, the limit is ₹20 lakh. No security is needed for loans up to ₹4 lakh. The interest rate is 12.5 per cent for loans up to ₹4 lakh, before gender or institute-based discounts (1 per cent), compared to 13 per cent from SBI.

The BMB has offerings for aspiring businesswomen, too. One of the issues faced by women while taking loans is their lack of collateral, as much of the immovable property tends to be in the name of their husband or father. Noting that “women are moderate risk takers”, the bank has chosen to do away with the collateral requirement for loans availed by women. As a woman, you can avail collateral-free loans worth up to ₹1 crore.

These are covered under the Credit Guarantee Fund Trust for Micro and Small Enterprises. Attractive deposit rates

Besides a wide lending portfolio, the bank also pays attractive interest rates on some savings accounts and deposits. Fixed deposit rates stand at 7 per cent for terms up to three months, 8 per cent for three to six months and 9 per cent beyond that.

If the tenure is between one and three years, you receive 9.15 per cent interest currently. That’s just above the rates other public sector banks pay. Senior citizens are given an additional 0.5 per cent rate of interest. For savings accounts too, while public sector banks currently offer 4 per cent interest per annum (for up to ₹1 lakh), BMB pays 4.5 per cent interest on balances up to ₹1 lakh and 5 per cent on balances above that sum. There is no minimum average quarterly balance requirement, nor minimum amount for account opening.

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