Things to know about SBI’s Kavach before using it for covid


Amid the current pandemic situation, State Bank of India (SBI) is offering loan for covid-19 treatment at the lowest interest rate. SBI has launched an unsecured loan offer to those who have an account at one of the SBI branches and need money to cover medical costs related to the covid-19 treatment of self and family members as of April 1st.

The loan is offered to employees and non-employees, as well as to retirees. So, to get the loan amount sanctioned, one of these SBI clients will have to submit a positive covid report.

They can benefit from a minimum loan of ₹25,000 and a maximum of ₹5 lakh depending on their eligibility. The bank will sanction the loan based on requirements such as the CIBIL score and the borrower’s loan repayment capacity. However, it will also depend on the internal policy of the bank.

The interest rate charged by SBI for the Kavach personal loan is maintained at 8.5% per year; this rate is currently set on the lower side. Normally, the interest rates are higher for unsecured personal loans, that is, sanctioned loans without collateral.

Currently, personal loans offered by SBI for a period of five years carry an interest rate of between 9.6% and 13.85%. The lender must also pay a processing fee of 1.5% of the loan amount (minimum ₹1000 and maximum ₹15,000) plus the goods and services tax.

To benefit from the Kavach personal loan, customers can visit one of the nearest SBI branches. By going to the bank branch and duly completing all the paperwork, documentation, KYC (know your client), etc., they can get the loan sanctioned.

If you are a mobile banking user, you can also get it through the digital channel. The loan is usually pre-approved through SBI’s YONO app and you get the loan amount instantly.

The repayment facility is also available through the branch channel. This means that the loan program also provides for the repayment of the amount that you have already committed for the treatment of covid-19. In addition, the Kavach loan will be in addition to existing loans, if applicable.

When opting for a Kavach personal loan, SBI clients are not required to pay any processing fees, security deposits, prepayment penalties or foreclosure fees.

The loan is offered for five years, or 60 months. This includes a three-month moratorium period. This means that the loan, which must be repaid in 57 equal monthly installments (EMI), includes the interest received during the moratorium period.

A moratorium period is a period during which you are not required to make a refund. This is a waiting period before which repayment of IME loans resumes.

In normal cases, repayment begins after loan sanction and payments must be made monthly. However, in the case of the SBI Kavach Personal Loan, you don’t need to pay an EMI for the first three months and you can pay afterwards.

In the event of repayment of Kavach personal loans, standing instructions on salary, pension, savings or checking accounts will be facilitated. This means that instead of initiating specific transactions each time, the bank will issue a standing instruction to the customer’s account in which regular transactions or EMIs can be processed and automatically paid to the bank on a predefined date. If you are planning to avail the Kavach personal loan, you should try to pay it off as soon as possible as you are not required to pay foreclosure fees.

This will help you save on the amount of interest, which, if paid over a longer period of time, can impact your finances.

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