Rama Krishna Sangem
An upper age limit of 55 years for personal loans set by many banking and non-banking financial companies is proving to be an obstacle for their loans growth. Currently, there is an unwritten age cap – between 21 and 55 years – for almost all these banking and NBFCs. Though the people above the 55 years age group have all the eligibility, they are rendered ineligible to get loans. This age bar can be removed.
A section of officials from various banking and NBFCs in Hyderabad who spoke to Excel India are of the view that this age cap is meaningless and can be raised to any level. “In fact, there shall not be any upper cap on age limit to get a loan, as we have an option of insuring the product,” said a senior executive of Axis Bank.
Of course, insurers will object to offering a policy to very old persons. Still there are solutions – either we can reduce the amount of loan and tenure of repayment or increase the premium of the policy. On the whole, senior citizens should not be denied personal loans, felt a majority of the NBFC officials. There are more than 40-50 NBFCs actively offering loans of all kinds. Most of these NBFCs are working for other major banks.
Some have 60 years age cap
There are some banks like SBI which offer personal loans up to 60 years, but this limit is calculated up to the end of repayment time – for example, if a loan is for 3 years, the upper limit should be within that. There are some other NBFCs which offer loans up to 65 years too, but they need collateral guarantees. But a majority of NBFCs maintain the cap of 55 years only. As a result, every day thousands of loan requests are turned down, said an executive with CreditBee, NBFC, in Hyderabad.
A latest report said in spite of lowering of interests rate by the BRI recently, banking and NBFCs are unable to attract credit growth. The only exception is HDFC bank here. There are several other reasons for poor loan growth, but a main reason is upper age caps. Fact is that only senior citizens with good CIBIL score, above 750 can repay the loan products and are good borrowers. Default rates are higher among the young borrowers only, admitted some bank officials.
