Union Bank, Central Bank of India offer the lowest interest rates on personal loans

Personal loans are back in the news. Reserve Bank of India governor Shaktikanta Das announced the Resolution framework 2.0 for restructuring loans of COVID-19-hit borrowers, besides providing a liquidity window to banks to offer loans for medical treatment. Some public sector banks including the State Bank of India, Union Bank of India and Canara Bank have rolled COVID-19 personal loans for individuals, with interest rates of 8.5 percent. Last year, too, several banks had launched such loans, with interest rates starting at 7.25 percent.

While personal loans are available relatively easily and interest rates are lower, it would be unwise to borrow without exhausting other, cheaper options first. Step one is to liquidate your fixed deposits and liquid mutual funds. Next, look at loans against fixed deposits and other financial instruments before turning to secured loans such as gold loans and loans against property as the interest rates are much lower.

A note on the table

Interest rates on personal loans for all listed (BSE) public and private banks have been considered for data compilation by Bankbazaar.com. Banks for which data is not available on their websites have not been considered. Data collected from respective banks’ websites as on June 10, 2021. Banks are listed in ascending order on the basis of interest rate, that is, bank offering the lowest interest rate on personal loan is placed at top and highest at the bottom. Equated monthly installment (EMI) is calculated on the basis of interest rate mentioned in the table for a Rs-5 lakh loan with tenure of five years (processing and other charges are assumed to be zero for EMI calculation. Interest and charges mentioned in the table are indicative and may vary depending on banks’ terms and conditions.