Under what parameters do banks provide personal loans?


I applied for a personal loan in a leading bank. But my request was rejected and the bank was not ready to sanction a loan because it was my first time. The bank official said that since I haven’t taken any loan before, they cannot trust a fresher’s repaying ability. I was shocked because I earn decent money and am capable of repaying my EMI. Under what parameters do banks provide loans?


A personal loan is a type of unsecured borrowing with fixed term and EMI schedule. However it can also be secured loan subject to risk evaluation by the banks and demand for the collateral to cover the default risk. Following are general criteria to avail a personal loan from the banks:

  •      The applicant should be an Indian
  •      The maximum age limit is 21 to 60-65 Years
  •      Minimum net income of Rs 15000 to Rs 20000 in metros and Rs 10000 per month in the rest cities
  •      Relevant Experience in the Job/business as per bank norms
  •      If you are a businessman than ITR for last 2 year along with B/S and P&L certified by a CA.
  •      Other factors such as Residence, Work experience, Past debt, repayment capacity, workplace etc. are also taken into consideration.

In your case if your documents are in order, work experience is ok and there is no history of bad credit (that can spoil your CIBIL) than you can recheck/revisit with the bank for a personal loan. Since you are a first time borrower therefore bank can ask for a collateral to mitigate the default risk and in the absence of security it can deny for a loan.


Bank see many things while you are applying for the personal loan.If you are a fresher or new to the bank then you have to give some reference to the bank if you want a loan from them.


What’s the maximum personal loan one can get?


It all depends on your personal finances, credit score and how much of a risk the bank may consider to be worthy as personal loans are highly unsecured loans. In most cases personal loan is offered up to 60 times the net monthly income of the applicant. So if you are earning Rs. 50,000 per month with no existing loan or overhead on you, you may be eligible for a
personal loan of Rs. 30 Lakhs (50,000*60).


The eligibility criteria for Personal Loans differs from one bank to another. Here are the general rules.

Here’s how you can decide if you are eligible for a Personal Loan or not:
If you are a salaried employee:
 You must be at least 21 years of age
 You must be no more than 58 years on the maturity of the loan
 You must earn at least Rs. 17,500 monthly
 You must have been employed for at least one year with your current organisation

If you are self-employed:
 You must be at least 24 years of age
 You must be no more than 65 years on the maturity of the loan
 You must earn at least Rs. 17,500 monthly
 You must have completed at least three years in the same profession

Another important factor that can affect your eligibility is your Credit Score. Click here to check your Credit Score for free. Before approving your loan request, most banks check your Credit Score first. You must ensure that your Credit Score is greater than 750. The simplest way of ensuring you have a good Credit Score is by using your Credit Card wisely and making timely payment of all your utility bills and other EMIs.

Since you are a first time borrower, we suggest that you go in for a loan along with a co-applicant or a guarantor. This will ensure that your loan doesn’t get rejected.

Want to check your eligibility for a Personal Loan? Click here.

BB Expert