Description

The Bank of Baroda (BoB) is a public sector financial services and banking company owned by the Government of India. In October 2017, it reported a total asset of over Rs 3.58 trillion, thereby becoming the 2nd biggest bank in India by assets. 

On 17th September 2018, the Indian Govt announced the merger of Vijaya Bank, Bank of Baroda and Dena Bank, which was the first-ever 3-way consolidation of public sector banks in India. With a combined business of Rs 14.82 lakh crore, it became the 3rd largest Bank after SBI and HDFC. 

The BoB provides fast and transparent personal loans designed to suit the unique needs of diverse customer segments. It offers suitable personal loan products to individuals in urgent need of funds to address their immediate financial issues. Bank of Baroda personal loans come with highly competitive interest rates and are offered to both the salaried & self-employed segments of borrowers.

Bank of Baroda personal loan rates and charges

The Bank of Baroda personal loan interest rates starts from 11.05% per annum. If the BoB personal loans are issued with floating interest rates, the rates are linked to the prevailing MCLR (marginal cost of funds based lending rate). This is the lowest rate at which the BoB can disburse loans. It cannot offer a rate below the existing MCLR. The MCLR is influenced by the changing market rates. In case there is a sudden hike in the market rate, the MCLR shoots up. As a result, the prevailing interest rates on all loans issued by a bank also get increased. However, if there is a dip in the market rate, the MCLR goes down inevitably. Even if the MCLR falls off, the BoB cannot reduce its personal loan rates below the base rate permissible.  The BoB MCLR with effect from May 2019 are given below- 

MCLR benchmark

MCLR in (%) with effect from May,7,2019

Overnight MCLR

8.30

1-month MCLR

8.35

3-month MCLR

8.45

6-month MCLR

8.65

1-year MCLR

8.7

Other Fees & Charges by BoB

Category

Rate/Charge

Loan Tenure

12-48 months

Maximum Loan Amount

Up to Rs.10 lakh (for metros and Urban areas)

Up to Rs.5 lakh (for rural and Semi-urban areas)

Processing Fees

2% of the loan amount (minimum of Rs 250) 

Prepayment Charges

Before 6 months-6% of the principal outstanding

After 6 months- NIL

Foreclosure Charges

NIL, but only allowed after payment of 1 EMI

Additional interest on late payment

2% per month 

*Rates are subject to periodic change. Personal loan interest rates in   Bank of Baroda and other fees/charges are subject to regular reviews and can vary from customer to customer depending upon a number of factors

Certain other fees/charged levied by the BoB on the borrowers of its personal loans are described below- 

  • Processing Fees: The BoB charges a unified processing fee which is inclusive of the processing fee, document verification fee, documentation fee and pre & post-sanction verification fee. The processing fee is fixed at 2% of the personal loan amount or Rs 250, whichever is higher. This fee is kept at Rs 100 only for personal loans offered to pensioners. 

For BoB personal loans against deposits, a nominal processing fee of 0.35% of the loan amount is levied. Applicable GST will also be added to the processing mentioned above. The processing fee should be paid by the borrower upfront, immediately after the BoB personal loan is sanctioned.

  • Legal opinion & valuation charges- The BoB charges a fee for providing legal deeds or legal opinions related to BoB personal loans through an empanelled lawyer of the bank. These fees would be charged on actual in addition to the processing fees.

  • Prepayment charges- The BoB levies a hefty prepayment charge of 6% of the principal outstanding for all prepayments done within the first 6 months. However, no charge is levied on any prepayments done thereafter. 

  • Penal charges- If the EMIs are not paid in time, the BoB levies a late payment fee of 2% every month, on the EMI amount due.

Other charges- In addition to the charges mentioned above, the Bank of Baroda also levies certain other charges. The applicant needs to bear these charges. These include stamp duty, statutory charges/fees, or document execution charges.

Important features of a Bank of Baroda personal loan

  • Highly competitive and best-in-class rate of interest
  • Completely transparent loan disbursal procedure 
  • The applicant should not be less than 21 years of age at loan application and be more than 60 years at loan maturity.
  • BoB ascertains the repayment capacity of applicants by considering his affordable income and credit profile. 
  • BoB offers special personal loan schemes for ex-defence personnel and pensioners. It also provides personal loans against Earnest Money Deposits (especially for purchasers of flat/plot/home).
  • Convenient repayment options (ECS, PDCs etc).
  • The total deductions from the monthly income of an applicant should not exceed 60% of his gross monthly income. If it exceeds, the applicant will be deemed ineligible for the personal loan.
  • Flexible repayment tenures.
  • BoB personal loan requires minimal documentation. Submission of only a few basic documents is enough from your end.
  • 50% of the processing fee would be reimbursed by the bank, if the borrower does not avail the personal loan sanctioned already. 

Determinants of a BOB personal loan interest rate

Different factors come into consideration when the Bank of Baroda calculates its personal loan interest rates for deserving individuals. Here are some of the factors - 

  • Age of the applicant

If you are closer to your retirement age, the perceived risk for the bank is that much more. In this scenario, the BoB will hesitate to consider your loan application. Because of this risk attached, the rate of interest offered to you will be on the higher side.

  • The personal loan tenure

The loan tenure or the loan repayment period of the Bank of Baroda personal loan has a say on the interest rates prescribed by the

 bank. The interest rate is higher for shorter loan tenures and vice versa. 

  • Your CIBIL score

While considering your personal loan application, the Bank of Baroda has a thorough check on your credit profile. Your credit profile includes details from where the Bank determines how efficient you are in handling your credit. The BoB also takes stock of your previous repayments (loan EMIs, credit card bills etc) as well.  If you failed to repay your previous dues on time on a couple of occasions and your CIBIL score is below 700, the Bank will set the interest rate on the higher side. 

On the other hand, if the above-mentioned criteria are found satisfactory, the BoB may offer you the best interest rates applicable.

  • If you are a BoB customer 

If you have been a customer of the Bank of Baroda for at least 6 months and you have maintained a good track record, you are eligible for special offers with cheaper interest rates. You will be offered a BoB Premium Personal loan which is available with or without a check-off. This means you can have the option where you can ask your employer to remit a part of your salary directly to the Bank as your EMI amount. 

However, do have in mind that interest rate and other offers are matters of sole discretion of the Bank. By becoming a customer, you do not necessarily ‘earn' the right to get all the offers presented by the Bank.

  • Your monthly income

Your affordable monthly income has a major impact while the BoB decides on the interest rate to offer to you. Your monthly income enables the Bank to ascertain your repayment capacity.

If you have a high income, the BoB is somewhat convinced that the amount wanted by you would return to the bank inside the loan tenure itself. On the other hand, if you have a low income, you will not be in good shape to pay your EMIs on time. In such a scenario, the BoB will see you as a risky proposition in terms of your loan repayment. Hence, it will hamper your chances of getting the cheapest interest rates from the Bank.  

  • Your bargaining power 

Let’s not mince words! It’s very much like buying any product from the market. Yes, you can bargain too, while applying for a personal loan. If you have the right credentials, (possess an impressive credit profile/monthly income) it will certainly make your task easier. 

 If you have a good credit score and fulfil all the loan eligibility criteria to the satisfaction of the BoB, it will value you as a ‘prized possession’. The Bank would not like to lose out a credible customer like you to its competitors and would certainly wish to form a long-term association with you. This way, you will stand a great chance to avail the best rates from the Bank.

If you are an existing employee of an organization of repute, it may help your cause as well. Such employees are considered financially stable enough to make timely repayments. Hence, in such a case, you are in a better position to negotiate and obtain the best interest rates from the BoB.