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.
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.
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.
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.
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 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 loans 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.