• Personal Loan for Govt Employees

    Government employees can avail loans from banks such as Oriental Bank of Commerce, HDFC Bank, Axis Bank, and State Bank of India for interest rates starting from as low as 10.6% p.a. While Union Bank of India levies no processing charges, a few others levy 0.5% to 3.99% of the loan amount as processing charges. The maximum loan tenure for personal loans offered to government employees is 72 months.

    Comparison of Personal Loans for Government Employees

    Some of the personal loan products available for government employees in India are listed as follows:

    Bank Interest Rate Max. Loan Amount Max. Loan Tenure
    State Bank of India 12.50% p.a. onwards (for defence, paramilitary, and coast guard personnel) Rs.15 lakh 72 months
    Axis Bank 15.75% p.a. Rs.15 lakh 60 months
    HDFC Bank 11.25% Rs.40 lakh 60 months
    Union Bank 10.60% onwards Rs.10 lakh 60 months (One year prior to retirement)
    Oriental Bank of Commerce 11.5% p.a. Rs.10 lakh 60 months
    IDBI Bank 12.9% p.a. Rs.10 lakh 60 months

    State Bank of India

    State Bank of India (SBI) offers a special interest rate for defence personnel in the country, under the Xpress Credit personal loan scheme. The maximum interest rate for defence, paramilitary, and Indian coast guard personnel is restricted to 12.50% p.a. For other applicants, this may be up to 15.40% p.a.

    Benefits and key highlights:
    • The bank promises fast and easy processing for all applicants.
    • It also provides the option of taking a second loan one year after the disbursal of the first loan. Repayments must be done properly to avail the second loan.
    • Pre-payment charges are waived off if the loan is pre-paid from the proceeds received from a new loan availed under the same scheme.
    Bank Processing Fee EMI per Lakh Pre-Closure Charges
    SBI 1% + Taxes Rs.2,250 3% on pre-paid amount

    *Service tax or GST may be applicable over the charges given here

    Axis Bank

    The personal loan product offered by the bank is available for salaried employees working in the government as well as private sectors. The approval process is quite easy for government employees who earn at least Rs.15,000 per month.

    Benefits and key highlights:
    • The documentation process is minimal, and the bank offers instant approval for all valid requests.
    • The bank offers a flexible repayment process with multiple modes of payment.
    • Individuals can transfer existing personal loans to Axis Bank.
    Bank Processing Fee EMI per Lakh Pre-Closure Charges
    Axis 1.50% to 2% Rs.2,419 Nil

    *Service tax or GST may be applicable over the charges given here

    HDFC Bank

    HDFC Bank offers its personal loan scheme to private limited companies as well as government employees. Applying for a loan with the bank is simple and involves minimal documentation. You can apply for the loan online through the bank’s official website.

    Benefits and key highlights:

    • Pre-approved loans get approved instantly for HDFC Bank account holders. Non-HDFC Bank account holders can expect loan approval in less than 4 hours.
    • The bank offers flexible loan tenures.
    • The personal loan interest rate can be lowered by transferring the loan balance to HDFC Bank.
    Bank Processing Fee EMI per Lakh Pre-Closure Charges
    HDFC Up to 2.50% Rs.2,405 2% - 4% of the outstanding loan amount

    *Service tax or GST may be applicable over the charges mentioned above

    Union Bank of India

    Union Bank of India offers retail loans to government employees who are in need of immediate funds. The Union Personal loan scheme is offered at two interest rates depending on whether the employer’s undertaking is available or not. If the employer’s undertaking is available, the rate will be the latest 1-year MCLR+2%, whereas if the employer’s undertaking is not available, the rate will be the latest 1-year MCLR+3.5%.

    Benefits and key highlights:

    • The loan applicant is required to maintain a salary account with Union Bank of India.
    • The employee can either be an applicant or a co-applicant of the loan.
    • If the loan is applied for the education of a government employee’s child, the government employee will become the co-applicant.
    Bank Processing Fee EMI per Lakh Pre-Closure Charges
    Union Bank of India Nil Rs.2,154 1% on outstanding liability

    *Service tax or GST may be applicable over the charges mentioned above

    IDBI Bank

    IDBI Bank offers its personal loan scheme to salaried individuals, non-professionals, self-employed professionals, and pensioners. The loan provides a free personal accident insurance cover. Pensioners who apply for a personal loan with the bank will have to provide a third-party guarantee.

    Benefits and key highlights:

    • IDBI’s personal loan is a multi-purpose loan that can be availed for hospitalisation expenses, home renovation, travel, etc.
    • Borrowers who have repaid the loan on a timely basis for 12 months will be eligible for a top-up loan facility.
    • All borrowers will be covered under a personal accident insurance cover for no charges.
    Bank Processing Fee EMI per Lakh Pre-Closure Charges
    IDBI 1% of the loan amount Rs.2,270 Nil to 2%

    *Service tax or GST may be applicable over the charges mentioned above

    Oriental Bank of Commerce

    Oriental Bank of Commerce offers a personal loan scheme exclusively for confirmed and permanent employees of PSUs, state and central governments, and other government institutions. It is a term loan that allows interested loan applicants to avail loans up to Rs.10 lakh.

    Benefits and key highlights:
    • A guarantor (preferably a fellow government employee) is required for availing this loan.
    • The documentation and approval processes are very simple for government employees.
    • The interest rate offered to government employees is about 1% lower than the interest rate offered to other salaried employees.
    Bank Processing Fee EMI per Lakh Pre-Closure Charges
    OBC 0.50% (minimum of Rs.500) Rs.2,199 Nil

    *Service tax or GST may be applicable over the charges given here

    Eligibility Criteria for Government Employees

    • Profession: Most banks in the market provide personal loans for all salaried employees. For government employees, the process is much easier. Employees working in any public sector unit (PSU), central and state government departments, and government schools and colleges can avail these loans.
    • Age: Most of the banks in the market require the applicant to be at least 21 years old. At the time of maturity of the loan, the borrower must be less than 60 years of age.
    • Income: Banks also have specific income criteria for borrowers. In most cases, borrowers must earn at least Rs.15,000 per month. Some banks provide certain relaxations in this criterion if the loan applicant has an account with the same bank.
    • Financial stability: The applicant must not have too many obligations with respect to other loans and liabilities. It is necessary that the take-home salary of the applicant must not be less than 30% of the gross income after paying all loan EMIs, if any.
    • Job tenure: The employment tenure of the individual is also considered by banks before providing loans. For government employees who are employed in the job for at least one year, there will not be any issue in getting a loan. However, people who have just entered the government service may have to check with the bank about their lending policy.

    Documents Required for getting personal loans

    • Identity proof
    • Address proof
    • Proof of employment
    • Salary slips (for at least 6 months)
    • Bank statement (for at least 12 months)
    • Signature proof verification

    Things to consider before taking Personal Loans

    • You need to check out the interest rates from multiple lenders before narrowing down on a particular loan product.
    • Government employees who have their salary account with the lending bank can avail additional discounts on their loans. You may check with your bank regarding the offers available for you.
    • Pre-approved loans are offered only to customers of a bank. These loans are approved instantly, and they are disbursed within a few hours. If you need the loan urgently, you may check for the availability of pre-approved loans.
    • The charges imposed on personal loans vary from one bank to another. In addition to the interest rate, you must also focus on these charges to minimise the cost of getting a loan.
    • Before you choose the loan tenure, you need to check whether the EMI amount fits your monthly budget. If the EMI is too high, you may have trouble repaying the loan on time. Plan your budget and choose the loan tenure accordingly.

    How to Apply?

    • Visit the official website of the lender and check out the information provided about personal loans. Most lenders provide an online application process to help their customers. You can simply fill out the details and wait for the bank to get back to you.
    • You may also visit the branch office of the bank and apply for the loan. You need to carry all the required documents and check with an agent at the bank to apply for the loan.
    • You may also use the services of a third-party aggregator like BankBazaar to apply for the loan. You can use the BankBazaar mobile app to keep track of your application.


  • What is the loan tenure available for personal loans?
  • The loan tenure typically varies from 12 months to 60 months. You can choose the desired loan tenure based on how much you can afford to pay in instalments every month.

  • How much time do banks take to process personal loans?
  • With the advent of technology, it is now very easy to get your personal loan approval. Most banks provide their approval within just a few hours. The loan amount will be disbursed within just one or two days in most cases.

  • What are the occasions in which personal loans are offered?
  • Banks do not impose any restrictions on how the loan amount can be spent. Hence, you can take a personal loan for any occasion based on your financial requirements. You may use the loan amount for various things like emergency medical needs, wedding, home renovation, vacation, etc.

  • Is it okay for retired government employees to apply for personal loans?
  • Most banks provide personal loans to individuals who are still employed. Hence, it could be a little difficult for retired employees to get personal loans. You may check with the lender with your requirement to know your eligibility for obtaining a personal loan.

  • What is the best way to get a good deal on personal loan interest rates?
  • Banks consider various factors when they determine the interest rate for a personal loan. If you want the best interest rates possible, you must have a good credit score. This shows that you have a good credit history and you are at low risk of default. It is also better to have your other loans cleared before applying for a personal loan. If your risk level is low, banks provide a good deal on personal loan interest rates.

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