Unsecured personal loans against credit cards have become dirt cheap. It is no more the days of personal loans only at rates of 20-36 per cent.
ICICI Bank, HDFC Bank, Citibank and SBI Cards are showering their credit card holders with offers for personal loans at rates less than 10 per cent.
ICICI Bank offers its credit card customers with good track record personal loans at interest rates ranging from a negligible 0.10 per cent to 0.77 per cent per month.
Says ICICI Bank's joint general manager B Madhivanan, "If a customer has maintained a good relationship with us for over three years and has never revolved payments, we are more than willing to offer loans at such competitive rates."
Unlike a normal unsecured personal loan for which banks demand post dated cheques, for this product, banks neither demand PDCs nor any collateral. Despite this, banks do not view such lending as a risky proposition as they lend to safe customers.
HSBC has a set of pre-approved rates for customers exhibiting a good credit behaviour. Against a standard customer, selected clientele with good credit behaviour is given loans at lower rates.
Says the bank's head-personal financial services, Nicholas Winsor, "After having identified the credit risks of different customer categories, we accordingly extend loan offers to them at rates more competitive than those on a normal personal loan."
Banks, however, do not openly advertise this practice of offering differential rates on personal loans based on customers' credit behaviour.
Once the credit bureau becomes proactive, banks will be able to market such products in a more effective manner, say bankers.
An executive of a private-sector bank points out, "Most banks offer an array of loans at much lower rates than advertised. But we maintain a low profile on the differential interest rate policy as we cannot afford to offer loans at attractive rates to all customers."
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