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Imagine if you have the convenience of getting a single loan that benefits not just you but also your parents, wife, children, siblings, or even a friend in case of a contingency.
Saraswat Co-operative Bank, India's largest urban co-operative bank, plans to introduce a loan like this for retail customers.
“In keeping with our standing as a trusted family bank, we are trying to launch a loan product with multiple benefits for the retail customer, his immediate and extended family,” said Mr Eknath K. Thakur, Chairman, Saraswat Bank.
Though the proposed loan product will allow only one person (the primary borrower) to move the loan application, various members of the borrower's family could be designated to operate the loan facility. They will be able to draw-down funds from ATMs across the country through ATM-cum-debit cards.
Being a member of the National Payment Corporation of India's National Financial Switch allows Saraswat Bank's customers to transact business at any of the 80,600-odd ATMs linked to the switch.
Besides the primary borrower, all members of the family who have been designated to operate the loan facility will have to be compliant with the know-you-customer norm.
“To avail themselves of the loan product, customers will have to offer security. Depending on the security offered by the borrower, the bank will fix the borrowing limit,” said Mr Thakur.
The new product will be a variant of the plain-vanilla overdraft facility. An overdraft facility allows an individual to continue withdrawing money even if the account has no funds.
As the multiple benefit loan will be backed by security, the bank will charge 12 per cent interest. This is 2.25 percentage points below the bank's prime lending rate.
Saraswat Bank has 222 branches and 133 ATMs spread across six States — Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Goa and Delhi. The bank's business (deposits plus advances) grew by 16 per cent in FY 2011 to Rs 27,313 crore as on March 2011, against Rs 23,517 crore as on March 2010.
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