Covid 19 Impact : Banks Offer Easier Terms and Lower Loan Rates


These steps are being taken by at least four banks, namely the Bank of Baroda, Bank of India, Bank of Maharashtra and the Union Bank of India. These loans are not just for existing customers but also for salary account holders.
These loans are all part of the Covid-19 package which was recommended by the RBI. However, as you may know, these are for the maximum time of 36 to 60 months. Three large banks of the country like Bank of India, Bank of Baroda and the Union Bank of India are already known to have lowered their interest rates by around 200 basis points for loans.
Bank of Baroda will be charging a 10.25% interest for covid-19 retail loans as much as Rs. 5 lakhs. On its website the bank says its interest rates are between 10.5% to more than 12.5%. 
When it comes to the UBI or the Union Bank of India, the loans are being offered at their external benchmark lending rate of 7.2%, and the credit score requirement is now 650 and above. It typically charges between 9.3% to 13.45 for personal loans. It has not decided to lower the interest rates. However, this facility is only forwarded to existing customers only.
Bank of India is one of the largest public sector banks in the country, and has set a credit score requirement of 675 at least, for getting loans. BOI loans are available to existing borrowers and salary holders alike.
According to experts, the growth in the banking sector shall remain negligible in FY21. It is true the RBI has deferred increased in the regulatory capital requirements of all banks by 6 months, as it was scheduled to be, public sector banks are suffering from a lack of budgeted capital and therefore cannot grow much. Bank’s credit limit growth shall only be 6%. Bad loan generation shall accentuate the problems, and will actually increase.
It is to know that banks are giving these loans only to those borrowers who have existing loans that are classified as standard. 

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