• Loans for Army Personnel

    Army personnel usually have a tough time collecting the pieces of their life and starting afresh after completing their service with the armed forces. This includes the Army, the Navy, and the Air Force. Though an income is secured for the armed forces personnel through pensions, subsidies and other perks, they still might want to get a job or start a business to continue their life actively. There are many financial options open to army personnel, from bank loan products to government loan schemes. Let us look at some of the prominent funding schemes available to army personnel.

    SBI Shaurya

    The SBI Shaurya is a home loan scheme introduced in August 2016, which aims to provide customised home loans to ex-servicepersons to suit their requirements and financial stature. The maximum age until which you can repay this loan is extended from 70 years to 75 years under this scheme. The loan tenure, however, cannot exceed 30 years. The interest rate on this loan is 5 base points lower than the normal home loan interest rate, which is currently trending at around 8.7% p.a. The bank does not charge any processing fee for this loan. You can also transfer your home loan from another bank to SBI under this scheme.

    BOI Jai Jawan Salary plus Account

    This is not a loan, per se, but the Jai Jawan Salary Plus Account by Bank of India (BOI) gives you a zero-balance account with an overdraft facility that allows commissioned officers to withdraw 4 times their net salary – capped at Rs.2 lakh – and non-commissioned officers to withdraw thrice their net salary – capped at Rs.1 lakh. You also get free personal accident insurance cover of Rs.10 lakh in case of death.

    You can also avail the benefits of the BOI Star Jai Jawan Home Loan Scheme, under which processing fees are waived off. If the borrower (who has to be an armed forces person) dies in war, external aggression or terrorist attack, the outstanding loan amount – up to Rs.50 lakh – is waived off.

    Self-Employment Schemes for former Service Persons

    Ex-servicepersons and widows of army personnel can avail the self-employment schemes offered by the Department of Ex-Servicemen Welfare, the Government of India. These schemes come under SEMFEX-I, II and III. SEMFEX-I provides Soft Seed Capital Assistance of up to 15% of the total project cost at 6% interest p.a. These loans can be obtained from the State Financial Corporation.

    SEMFEX-II focuses on agricultural employment for ex-servicepersons. This scheme is funded with the help of the National Bank for Agriculture and Rural Development, which will fund banks that give loans to former servicepersons for development of agriculture, mushroom cultivation, horticulture, minor irrigation, dairy and poultry farming, cattle rearing, fisheries, agro industries, cottage and handloom industries, logistics services, etc. The armed forces personnel can get Soft loan Assistance for Margin Money to start any farm and non-farm businesses. You can get up to Rs.10 lakh as loan.

    Former servicepersons wishing to start rural industries can use the schemes under SEMFEX III. They will get priority in loan approvals, and banks will provide loans of up to 95% of the estimated project cost. This scheme can be obtained via Zila Sainik Board or Rajya Sainik Board.

    National Equity Fund Scheme

    The National Equity Fund Scheme (NEFS) is covered by the Small Industries Development Bank of India (SIDBI), and it gives equity funding to small scale industries at a service charge of 5%. You can get loans of up to Rs.10 lakh, and the project cost should not be more than Rs.50 lakh.

    IDBI Personal Loan

    IDBI offers personal loans to armed forces personnel to the tune of Rs.10 lakh. You can choose tenures of 1 to 5 years and you can make partial pre-payments at no extra cost. You will also get a free personal accident insurance policy along with the loan. The interest rate ranges from 12.99% to 13.49%.

    You can also go for personal loan and business loans offered by other banks, though you will have to meet the eligibility criteria set by the respective banks. Checking with the bank you have the longest relationship with, or with nationalised banks will give you the best loan options.

    Army Group Insurance Fund (AGIF) Home Loan Kit from HDFC Bank

    Army Group Insurance Fund (AGIF) has teamed up with HDFC Bank to provide home loan funding to army personnel, helping them realize their dream of owning a home. Some of the notable features of these loans are:

    • They are hassle-free and quick to obtain
    • Borrowers can avail doorstep assistance with these home loans
    • Borrowers can choose from multiple customisable repayment options depending on their budget
    • HDFC boasts of a wide-spread branch network and borrowers can approach any branch to avail this loan facility
    • HDFC also offers borrowers expert technical and legal advice on choosing the right home loan

    SBI Education Loan for Defence Personnel

    Army personnel who are desirous of pursuing further studies can fund the same with the help of the SBI Education Loan for defence personnel. This loan can be availed for studies at institutions that are tied to the Indian National Army - Army Institute of Law, Army Institute of Management (AIM), Army Institute of Technology (AIT), Army College of Dental Sciences (ACDS), and Army College of Medical Sciences (ACMS). A specially reduced rate of interest is applicable for army personnel opting for this loan. The loan can be availed without a collateral for a maximum amount of Rs.20 lakh.

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