Defaults-hit banks tighten norms for personal loans

MUMBAI: With rising delinquencies, banks have become stricter in their appraisal of applications for unsecured personal loans. Now, in addition to salary, parameters such as marital status, educational qualifications, job stability and employer profile are being taken into account for loan eligibility.

Those not employed with large companies or drawing a salary below Rs 3.5 lakh per annum are likely to find it difficult to avail of a personal loan. Small-ticket personal loans (Rs 25,000-50,000), which were targeted at low-income individuals, have almost vanished. Even for those earning over 3.5 lakh-category, the maximum loan has been scaled down.

Earlier, borrowers with a track record were considered safe bets by banks. ���Today, banks are reluctant to lend on this count alone and hence, the level of documentation has gone up,��� informs Kamlesh Rao, executive vice-president, personal finance and mortgages, Kotak Mahindra Bank. If you are servicing multiple loans and wish to apply for an additional one, your application could be rejected, despite an impeccable repayment history.

What���s more, financial position is not the only criterion. ���Residence in a respectable locality (read non-slum areas) and having a landline connection are also being considered as favourable factors,��� said Satkam Divya, managing director and CEO, loan portal rupeetalk.com. ���Job stability and stable residential address do influence banks��� lending decisions. Also, marital status has come into the picture now. The perception is that married individuals tend to exhibit a ���relatively��� more responsible behaviour,��� said Harsh Roongta, CEO, Apnaloan.com.



The global economic scenario has already impacted the domestic job sector, either in forms of lay-offs or salary cuts. ���Salary being one of the main parameters of sanctioning unsecured loans, we definitely feel the need to review the due diligence mechanism. The nuts and bolts of the lending business are been tightened across banks, given the experience of some leading global banks,��� said a senior official with a private bank. He added that his bank is now restricting credit card issuances to savings account customers with a comfortable balance in their account.