The need for emergency financial assistance can arise at any time – irrespective of whether you are in your 30s or 60s. For years, personal loans have been offering timely support to individuals from all walks of life, helping them meet their emergency cash requirements. 

Though personal loans are readily available and easy to secure, older adults, especially retirees, have a hard time securing one. Banks and other personal loan lenders consider pensioners a higher risk – since they don't have a steady source of income. Most banks have an upper cut-off age limit for personal loan eligibility. Hence, senior citizens find it harder to secure personal loan approval.  

But, the good news is that several lenders today recognise the need for financial assistance for senior citizens. They offer exclusive personal loans to pensioners with a wide array of benefits. Here, in this guide, we have compiled a list of the top 5 personal loans in India for pensioners. 

Salient Features of Personal Loans for Pensioners

  • Eligibility Criteria

Both central and state government retired employees who are withdrawing a pension are eligible for personal loans for pensioners. Some banks even offer personal loans for pensioners to former employees of private corporations who receive a regular monthly pension. Spouses who are receiving a family pension on behalf of their deceased spouse are also eligible for this loan. 

  • Repayment Terms

Just like a regular personal loan, the repayment tenure for personal loans for pensioners’ ranges from 12 to 60 months. The maximum tenure varies from one lender to another. 

  • Interest Rate 

The interest rate depends on several factors like borrowed amount, age of the borrower, bank’s policies, collateral or security provided and more. Generally speaking, pension loans have lower interest rates compared to regular personal loans. 

  • Security/Collateral 

Since personal loans are unsecured, they don’t require any collateral or security. Also, since pension loans are offered to senior citizens withdrawing a secure pension, there is no need to provide any additional guarantee or security. 

Additional Reading: National Pension System and its Benefits

Top Personal Loans for Senior Citizens and Pensioners

  1. PNB Personal Loan Scheme for Pensioners 

The personal loan scheme for pensioners from Punjab National Bank is offered to senior citizens drawing pension via a PNB account. The loan amount can be used to meet emergency medical expenses of pensioners as well as other financial requirements. 

Salient Features:

Eligibility All pensioners drawing pension via any PNB branch

Quantum of Finance

 Minimum – Rs. 25,000

Maximum

  • For pensioners aged up to 70 years: Rs. 10,00,000 or 18 times the net monthly pension (20 times the net monthly pension for defence pensioners)
  • For pensioners aged from 70 to 75 years: Rs. 7,50,000 or 18 times the net monthly pension (20 times the net monthly pension for defence pensioners)
  • For pensioners aged above 70 years: Rs. 5,00,000 or 12 times the net monthly pension
Processing charges Nil
Documentation charges Rs. 500 + GST
Rate of Interest Base Rate + 2.5%
Security/Collateral Guarantee of earning children, spouse eligible for family pension or third-party guarantee
Repayment Tenure Maximum of 60 months
(for pensioners aged above 75 the maximum repayment tenure is 24 months)

 

  1. State Bank of India Pension Loan

State Bank of India offers pension loans to help senior citizens meet their finance requirements. Whether you are looking to fund your child's marriage, take an overseas trip, buy your retirement home or receive medical assistance, SBI pension loans can help you meet all your financial needs. Easy to avail, minimal documentation, SBI pension loan is hassle-free.

Salient Features:

Eligibility
  • For central and state government pensioners:
  • The borrower must be aged 76 years or below
  • Must receive pension via SBI bank
  • Guarantee by the spouse (for family pensioners)
  • For defence pensioners:
  • The pension payment order is with SBI
  • No minimum age limits
  • Maximum age at the time of loan processing not to exceed 76 years
  • Includes pensioners of army, navy, air force, coast guards, paramilitary forces (BSF, CISF, CRPF, etc.), Assam Rifles and Rashtriya Rifles
  • For Family Pensioners:
  • Age limit should not be above 76 years
  • Includes authorized members of the family who are eligible to receive a pension after the death of the pensioner
Maximum Eligible Loan Amount and Repayments
For central and state government pensioners:
Age at the time of loan sanction Age at the time of loan repayment completion Maximum loan amount (18 months pension or) Repayment period
Below 72 years Up to 77 years Rs. 14 lakhs 60 months
72 – 74 years Up to 78 years Rs. 12 lakhs 48 months
74 – 76 years Up to 78 years Rs. 7.5 lakhs 24 months
For defence pensioners:
Age at the time of loan sanction Age at the time of loan repayment completion Maximum loan amount (36 months pension or) Repayment period
Below 56 years 63 years Rs. 14 lakhs 84 months
56 – 72 years 77 years Rs. 14 lakhs 60 months
72 – 74 years 78 years Rs. 12 lakhs 48 months
74 – 76 years 78 years Rs. 7.5 lakhs 24 months
For Family Pensioners (including defence pensioners):
Age at the time of loan sanction Age at the time of loan repayment completion Maximum loan amount (36 months pension or) Repayment period
Below 72 years 77 years Rs. 5 lakhs 60 months
72 – 74 years 78 years Rs. 4.5 lakhs 48 months
74 – 76 years 78 years Rs. 2.5 lakhs 24 months

  1. Cent Pensioners

It’s a personal loan scheme from Central Bank of India for pensioners. It’s available both as a term loan and overdraft facility. 

Salient Features:

Eligibility
  • All pensioners/family pensioners drawing pension via any Central Bank of India branch.
  • Pensioners who receive their pension via the Treasury or DPDO (Defence Pension Disbursing Office)
  • Pensioners receiving a pension from Central Bank of India.
Quantum of Finance
  • For pensioners aged up to 75 years: 18 months pension to a maximum of Rs. 5 lakhs
  • For pensioners aged above 75 years: 12 months pension to a maximum of Rs. 2 lakhs

For interest rates, processing charges and other details get in touch with the nearest Central Bank of India branch. 

  1. Bank of India Star Pensioner Loan

Bank of India offers the Star Pensioner Loan scheme to regular and family pensioners who withdraw a monthly pension via any of Bank of India’s branches. Retired employees of private firms who receive a pension are also eligible for this loan scheme. However, note that this loan is not available to individuals who have been dismissed from their job or given compulsory retirement. 

Salient Features:

Quantum of Finance
  • For pensioner or family pensioner less than 75 years
  • Maximum loan amount – Rs. 5 lakhs or 15 times of net monthly pension
  • For pensioner or family pensioner aged above 75 years
  • Maximum loan amount – Rs. 1 lakh or 3 times of net monthly pension
Rate of Interest RBLR + 2.5% = 10.5%
Repayment Tenure Maximum up to 60 months

  1. UCO Pensioner Loan

Pensioners who receive pension via UCO bank and retired employees of the bank drawing pension are eligible for this loan scheme. Borrowers can use the loan amount to meet the medical requirements of self/spouse/children, to pay medical insurance premiums, for marriage expenses, educational expenses of children, travel expenses, home renovation expenses, agricultural needs and funeral expenses. 

Salient Features:

Eligibility All pensioners drawing pension via any UCO Bank branch
Quantum of Finance
  • For pensioners with family pension facility available and a living spouse
  • Maximum loan amount – Rs. 10 lakhs for borrowers aged up to 70 years
  • Maximum loan amount – Rs. 5 lakhs for borrowers aged above 70 years
  • For family pensioners, pensioners without a living spouse or pensioners without family pension
  • Maximum loan amount – 10 times the monthly pension subject to a maximum of Rs. 3 lakhs
Rate of Interest
  • For public – UCO Float Rate + 3.30%
  • For Retired UCO Bank staff – UCO Float Rate + 2.30%
Processing Charges NIL
Repayment Tenure The loan should be repaid fully before the pensioner reaches 75 years and within 48 monthly instalments
Prepayment Penalty NIL

EndNote

Don’t Let Financial Emergencies Ruin your Retirement 

These are some of the best pension loan schemes in India for pensioners. Make sure to go through the features and other loan terms and conditions and choose the right loan offer that best fits your needs. For further details on any of these loan products, get in touch with our loan experts here at CreditMantri.