During the height of recession, banks had stopped offering personal loans. However they have started offering these loans again, but have become very strict with offering unsecured loans.
A banking analyst with a brokerage firm said, “During recession banks like ICICI and Kotak Mahindra had stopped giving personal loans. They are now re-entering this segment in order to boost their current account and savings account (CASA) through cross-selling of products.”
Now a person availing of a personal loan will need to provide documents validating his identity, residence and income. This can comprise of copies of PAN card, ration card, etc. Salaried people might have to provide their most recent salary slip, Form 16 for the previous financial year, and their bank statement for the previous 6 months. Self-employed people have to provide their IT returns for the earlier 6 months. C S Jain, head of personal banking, IDBI Bank said, “Banks have become little more careful. Documents are necessary to ensure financial stability.”
Credit card debts and personal loans, make up the non-performing assets (NPAs) or bad loans for banks, as they do not require a security. Hence customers with a strong financial base and those already having an account with the bank are chosen.
Subrat Pani, business head credit cards division, Kotak Mahindra Bank said, “That is because we have more information about them and there is scope for more due diligence and the cost of acquiring such customers is also less”