State Bank of India Personal Loan review

State Bank of India is one of tha largest, oldest and most reputed banks in our country. SBI offers personal loans under its 'SBI Saral Personal Loan' scheme. Under this scheme, personal loans are disbursed at over 3000 branches across India. Personal loans are granted for any legitimate reason.

State Bank of India charges interest on a daily reducing balance. Their interest rates are reasonable. The processing charges are between 1-2% of the loan amount and there are no hidden charges.

No security required

The State Bank of India doesn't require any security for granting a personal loan under this scheme.

Period of repayment of personal loan

The period of repayment can be as long as 48 months (4 years). You can pay the loan in 48 installments spread over a 4 year period. You can pay more than the EMI if you wish without attracting any prepayment penalty.

Prepayment of this personal loan

While SBI doesn't impose any prepayment penalty, there is a fee of 1% of the loan value if you choose to repay the entire loan within six months of taking it.

Personal loans are granted for any legitimate purpose including a marriage in the family, domestic or foreign travel, expenses on education, meeting the margin for buying real estate etc. For some of these heads such as education or real estate you can usually get a loan at lower interest rates. For housing finance for example, the government offers loans through nationalised banks at lower rates of interest.

Eligibility for the personal loan

You can get a loan under this scheme from SBI if you're a salaried person with a reputable company or a self employed engineer/doctor/chartered account or MBA with 2 years in your profession. The minimum amount of the personal loan can be Rs.24,000 in metro cities including Mumbai (Bombay), Delhi, Chennai (Madras), Kolkata (Calcutta) and urban areas including Surat, Ahmedabad, Aurangabad, Bangalore, Gurgaon, Noida, Kolhapur etc. and Rs.10,000 in rural areas. You can get a loan of upto 12 times your net monthly income if you're a salaried person or a pensioner subject to a maximum of Rs.10 lakhs.

The documents required for processing the personal loan include:

For existing customers of State Bank of India:

Passport size photograph

From salaried individuals

Latest salary slip and Form 16

SBI personal loan interest rate

The interest rate is usually 4% above State Bank Advance Rate (SBAR). Currently 4.00% above SBAR Floating makes the interest rate 17.75% p.a.

Alternative to personal loans

State Bank of India has a special scheme to advance loans to employees wishing to buy shares of their companies under the ESOP (Employee Stock Option Program). They also offer education loans, loans to pensioners, festival loans, loans to teachers, loans against shares and debentures, loans for earnest money deposit, against rent receivable, for army personnel and for meeting medical expenses. Many of these loans have a lower interest rate as compared to those for personal loans.

They also attract lower processing charges. Diwali is usually a time when a lot of applicants rush for Diwali festival loans to State Bank of India.

The only disadvantage dealing with State Bank of India and similar nationalised banks is the amount of time spent due to the red tape and slow proceedure involved. Other than that interest rates of State Bank of India are usually lower as compared to some other private and/or foreign banks.

If your need for a loan is very short term in nature and you need only a small amount of loan, sometimes it may be worthwhile to consider signing up for a credit card like the ICICI Bank lifetime free credit card.