7th Pay Commission: PNB joins SBI to woo Central government staff with cheaper loans

Taking a cue from its bigger peer State Bank of India, public sector lender Punjab National Bank (PNB) has come out with special home and auto loan offers to attract Central government employees who are flush with cash after the bonanza handed out to them with the implementation of the recommendations of the 7th Central Pay Commission (CPC).

The scheme titled "PNB Pride" is effective from October 1, 2016, and comes with zero documentation and processing charges. Other terms and conditions applicable to existing home and vehicle loan borrowers will apply to those availing of loans under the "PNB Pride", according to the bank.

The aim of the scheme, according to the lender, is to "ensure availability of Housing Loan and Vehicle Loan at attractive rates and ensure a house and a car for all government employees."

The floating rate of interest for vehicle loans will be 9.55 percent (0.25 percent + marginal cost of lending rate, or MCLR). The fixed rate of interest is also the same, with a reset clause of three years.

As for home loans, the floating rate will be 9.30 percent and the fixed at 9.80 percent. 

Earlier, State Bank of India (SBI) had announced flexible home loans to Central government employees ("SBI Privilege Home Loan") and defence personnel (SBI Shaurya Home Loan") with pensionable service.

"Under the new schemes, employees of central/state governments, defence forces, public sector banks, public sector enterprises of central government and other individuals with pensionable service will be offered home loans tailored to their specific needs," the bank said in a statement in August this year.

"The launch of 'SBI Privilege Home Loan' and 'SBI Shaurya Home Loan' products is timed with the notification of 7th Pay Commission recommendations. Surplus income can thus be utilised by government employees and defence personnel towards purchase of new/better house," it added.

The bank gave an option to Central government employees to repay home loans up to the age of 75 years, as against 70 years applicable in other home loans given by the bank.

The recommendations of the 7th CPC cover 47 lakh Central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pensioners are from the defence forces.