Loans play an important role in accommodating the shortage of funds. Want to buy a house or a car? Take a loan. Want to execute a business plan which needs funding? Take a loan. Now, the power of credit is more accessible to women who want to fulfil the dream of acquiring a property or starting a business. When it comes to taking a loan, interest rates are key, especially to the average middle-class customer. Banks are now imparting special treatment to women loan applicants through the way of lowered interest rates.
We take a look at some women-friendly loan schemes and why women must make the most of them.
Why the discounts to women?
There is a perception, and it is also backed by data, that women are more likely to pay off their debts and less likely to default than men, and this is why banks and financial institutions welcome women applicants.
There have also been government initiatives for empowering women: various schemes and loan proposals where women get special interest rates. With a significant growth in the number of women in the country’s working population, it has become all-the-more important to financially aid women to drive socio-economic changes.
Special loan products for women
Apart from lower interest rates, banks and FIs have relaxed eligibility norms and lowered processing charges on loans for women. (Note that these features depend on a bank or FI’s norms which are altered from time to time.)
There is the Bharatiya Mahila Bank (BMB), launched in 2013 and targeted at women. BMB offers several women-oriented loan products like Loan for Beauty Parlour/Saloon, Food Catering, Kitchen Modernization etc.
Recently, the Narendra Modi government’s Housing For All Mission has a special focus on women especially from low income household. Schemes like MALA (Mahila Aawas Loan from Asipre) provide loans ranging from Rs 2 to 12 lakhs for women applicants from low-income groups.
Also, several banks have discounts in processing fees, reduced margin requirement and interest rate discounts on business loan for women individual looking to start small or micro enterprises.
Benefits of buying an asset in women’s name
Availing a loan, especially a home loan in women’s name has many advantages. Many states provide special discounts on stamp duty if women are co-applying for, or are the primary holders of, a property.
The difference in stamp duty varies from 1 to 2% between men and women loan applicants. Some of these states are Rajasthan, Delhi, Haryana, and West Bengal. Some prominent real estate developers also offer special property rates to women buyers.
Beyond the financial benefits, encouraging women to take loans acts as a motivator for them to remain active in their professions in order to earn the income needed to settle their debts. That in itself is an act of empowering women.
If a woman applicant is not earning any income, she may not be eligible to earn tax benefits under the I-T act. If a couple—husband and wife—together own a property, they can both claim tax benefits as per their share in the property, provided they are both earning an income.
If the husband has a weak CIBIL score, then applying for a loan with the wife as a co- applicant can strengthen their application approval chances.
Occasionally, co-owning a property during a dispute can be troublesome to women. But their legal hassles can be minimised by making the terms of the co-ownership legally binding through an agreement.
Last but not the least…
Don’t consider women as co-applicants just for all the benefits that come with such an arrangement. Do it because it can genuinely empower women—both socially and economically—as the true owner of assets.
The author is CEO, BankBazaar.com