Master Circular – Pension Loans (Updated up to 31.03.2024)

Introduction

  • This document is the SBI Master Circular for Pension Loans, updated up to 31.03.2024. It consolidates all prior instructions and supersedes earlier circulars (e.g., NBG/PBU/PL-PERLOANS/66/2022–23 dated 27.03.2023).
  • Issued by State Bank of India, Personal Loans Department, Retail Loans, Corporate Centre, Mumbai.
  • Structure: Part I – Master Circular; Part II – Annexures. Includes a comprehensive set of product variants under the SBI Pension Loan Scheme, plus related NIL/yes-clarifications for specialized pension loan schemes (e.g., Jai Jawan, PAPNL, PSU Pension Loans, etc.).
  • Objective: Enable branches and operating units to extend financial assistance to pensioners (central/state government, SBI pensioners, PSUs, and eligible defense/pensioners) while detailing eligibility, terms, processing, risk controls, documentation, disbursement, and recovery processes.
  • Access through RLMS (Retail Loan Management System) for processing; some variants use YONO/INB/RINB for digital origination.

A. SBI PENSION LOAN

  • Eligibility criteria (extant norms):

    • Regular Pensioners and Family Pensioners (including SBI, Defense, and Central Armed Police Forces Pensioners) whose PPOs are with SBI CPPC or HRMS or at PCDA Prayagraj under SPARSH are eligible.
    • Family pensioners (spouse/legal heir) whose pension is maintained by CPPC/HRMS or at PCDA Prayagraj under SPARSH are eligible.

  • Loan amount (Regular vs Family Pensioners):

    • Regular Pensioners: minimum ₹25,000; maximum up to 18 months’ pension with ceilings based on age:
    • Up to 72 years: ₹14.00 lakh
    • 72–74 years: ₹12.00 lakh
    • 74–76 years: ₹7.50 lakh
    • EMI/NMP not to exceed 50% of net monthly pension (NMP).
    • Family Pensioners: minimum ₹25,000; maximum up to 18 months’ pension with ceilings:
    • Up to 72 years: ₹5.00 lakh
    • 72–74 years: ₹4.50 lakh
    • 74–76 years: ₹2.50 lakh
    • EMI/NMP not to exceed 33%.

  • Margin: NIL

  • Age at loan sanction: Upto 76 years

  • Repayment period: up to 72 months (loan to be repaid by age 78)

  • Security: NIL

  • Third Party Guarantee (TPG):

    • Regular Pensioner with PPO: NIL
    • Other Regular Pensioners: TPG of spouse eligible for family pension; if spouse absent, TPG of other family member or a third party (worth loan amount).
    • All Family Pensioners: TPG of a person who has maintained a satisfactorily conducted account with Bank; preferably son/daughter.

  • Facility: Term loan (unsecured)

  • Processing fee:

    • SBI Pensioners & Defense Pensioners (including SBI/Defense Family Pensioners): No processing fee.
    • Other Regular Pensioners: 1% of loan amount + GST (min ₹1,000, max ₹10,000 + GST).
    • Other Family Pensioners: 0.50% of loan amount + GST (min ₹500, max ₹2,500 + GST).

  • Rate of Interest (ROI): ROI is 2.55% spread over 2-year MCLR with no reset. See latest circular under Personal Loans for current ROI. ROI=MCLR2Y+0.0255ROI = MCLR_{2Y} + 0.0255

  • Documentation (typical):

    • Application-cum-Authority Letter (Annexure-1).
    • DP Note on COS 228 for guarantor endorsed by guarantor (COS-228 family).
    • DP Note Take Delivery Letter.
    • PPO copy or other document detailing age of pensioner and spouse.
    • Irrevocable undertaking from pensioner (Part II, Annex PL-II).
    • Advice to Salary/Pension Disbursing Authority re: not permitting shifting of pension account (Part II Annex PL-III).
    • SI Mandate.

  • Disbursement: Amount credited to the pensioner’s running pension account (Savings/Current).

  • Risk scoring model: RSM score of at least 45 (for all variants). See Annexure-B (Pension Loan Score Card).

  • Place for availment of loan:

    • Regular/Family pensioners with PPO: Home branch or nearby branch; non-home branch for regular pensioners only.
    • Regular pensioners with PPO at PCDA Prayagraj (SPARSH): Home branch (Pension paying branch) only.

  • Processing/Survey: Pre-sanction survey not stipulated for all; RLMS mandated for processing; SOP in RLMS path.

  • CIBIL / Credit Information Report (CIR):

    • Up to ₹4 lakh: Primary CIC (CIBIL); no secondary CIC.
    • Above ₹4 lakh: CIBIL + Experian; if no hits, CRIF/Highmark/Equifax.
    • Consolidated CIC report to be kept with loan documents; no separate CIR required.

  • Pre-payment charges: 3% on prepaid amount for full/part payments before term end.

    • No prepayment charges if closed from the proceeds of a new loan opened under the same scheme.

  • Penal charges: 2% per month on irregular/overdue amount.

  • Processing of Pension Loans: All pension loan applications to be mandatorily processed through RLMS; follow SOP in RLMS.

  • Opinion Reports: Obtention of Assets & Liabilities Statements and compilation of Opinion Reports waived in all cases.

  • Place for National/regional variations: See Part II for annexures tied to the above.

  • Documentation and compliance: Annexe-1 to Annexe-III (and Annexure-C) outline specific letters and undertakings; these are standard templates to ensure legal and regulatory compliance for shifting, undertakings, and master-file notings.

  • Summary of risk controls and eligibility gating:

    • Progressive risk checks using internal PSQ models, CIC scrubs, and cross-product validation (PAPNL risk gating also referenced).
    • EMI/NMP caps to guard against affordability; age limits to control risk.
    • RLMS-based processing ensures standardized workflow and audit trail.

B. TOP-UP LOAN (SECOND LOAN)

  • Purpose: Allows a second loan after disbursement of the first, provided the first is satisfactorily conducted and current.
  • Conditions:
    • No more than 2 Pension Loans can be standing in the name of a borrower.
    • Overall EMI/NMP ratio must be within 50% for Pensioner and 33% for Family Pensioner (combined with second loan).
    • Sum total of outstanding on 1st loan and limit of 2nd loan must not exceed the pensioner’s entitlement at the time of availment.
  • Process: An offer letter highlighting features (specimens Annex I-A/I-B and Annex II-A/II-B) should be sent; translations advised in local languages.

C. JAI JAWAN PENSION LOAN

  • Scope: Pension Loan for pensioners of Armed Forces and Central/State paramilitary forces whose PPOs are with SBI CPPC or PCDA Prayagraj under SPARSH.
  • Family pensioners of Defense/Paramilitary continue to avail under SBI Pension Loan Scheme.
  • Eligibility: Regular Defence Pensioners and Central Armed Police Forces pensioners with PPO maintained by CPPC or SPARSH.
  • Purpose and loan structure: Similar to SBI Pension Loan; unsecured facility; disbursement to pension account; repayment via SI/EMI.
  • Disbursement and repayment: EMI through SI in pension receiving account; 72 EMIs; repayment up to age 78 (for defence pensioners).
  • Maximum age at sanction: Up to 76 years; 72 months repayment; secured/unsecured as per scheme.
  • Security/TPG: NIL for Security and TPG in most cases; specific conditions for defense retirees with PPO at PCDA may require additional checks. See Annexures for PPC/Consent requirements.
  • Special conditions for defense pensioners with PPO at PCDA Prayagraj: obtain PPO copy; inform PCDA about loan to prevent pension shifting; irrevocable undertaking from pensioner not to shift pension; ensure NOC from Bank if needed.
  • Top-up provisions: Similar to regular top-up, with 2nd loan constraints and EMI/NMP ratios applied.

D. Retail Asset Credit Centre (RACC) – Hub and Spoke model

  • Clarification of the RACC model for templated loans (Xpress Credit & Pension Loans).
  • Proposals within sanctioning powers of Hub/Spoke/Campus/Captive branches are sanctioned and disbursed locally; beyond powers routed to RACC or RBOs as per delegation.
  • TAT: For templated loans (Xpress Credit & Pension Loans), TAT is 1–3 days; Pre-Sanction Survey should be carried out same-day where applicable.

E. PAPNL: Pre-Approved Pension Loan under PAPL umbrella

  • Eligibility criteria for Pre-Approved Pension Loans (PAPNL):
    • Pension loans up to ₹5 lakhs for Regular Pensioners and up to ₹3 lakhs for Family Pensioners are offered as Pre-approved Loans.
    • End-to-end digitized process via YONO and INB with instant disbursement; 4-click process; leads generated using AI/ML risk model to target less risky customers.
    • Data extraction from pension databases with conditions on CIF, PAN, OVD, etc. (Details in the document: e.g., active pensioners, data privacy conditions, etc.).
  • Features and process: End-to-end digital through YONO; platform handles digital acceptance (OTP) with no physical documents exchange.
  • Eligibility screening (filters): Pension accounts in single/joint name; CIF status active; age constraints (CPPC Regular/SBI Staff pensioners: 35–71 years; CPPC Family pensioners: 25–65 years 9 months); PAN and at least one OVD; KYC validity > 4 months; etc.
  • Risk and compliance: AI/ML risk mitigation model flags risk; CIC scrub; cross-product validation; CIBIL scrubs; DLs for NPA/SMA status; minimum NMP and EMI/NMP caps; overall gating ensures prudent lending.
  • Financials: PAPNL terms mirror Pension Loan parameters; unsecured loan with ROI as per pension loan scheme; processing fee 1% plus GST (min ₹1,000, max ₹10,000); moratorium not applicable; EMI payments via SI; penalty charges for defaults; cross-checks with CPPC/Treasury as applicable.
  • Eligibility and lead sharing: Leads are shared with YONO and INB channels and displayed on Analytics Dashboard for marketing purposes.
  • Validity of offer: Offer valid till end of the calendar month; dynamic monthly refresh of eligible lists.
  • Documentation: Digital acceptance via app/portal with OTP; no physical documents required.
  • Amounts and limits: PAPNL amounts aligned with PAPNL product specs (up to ₹5 lakh for Regular Pensioners, ₹3 lakh for Family Pensioners) with risk filters applying.

F. SBI Pension Loan Scheme: Pensioners of PSUs

  • Rationale: To leverage untapped PSU retiree base under Xpress Credit, including RBI as an approved PSU under the PSU Pension Loan Scheme.
  • Eligibility and process: PSUs with PPOs maintained by the PSU; loans sanctioned under PSU Pension Loan Scheme subject to CGM approval; scenario-based eligibility for consent/undertakings from PSU Pension Disbursing Authority.
  • ROI and terms: Applicable ROI 2.55% above 2-year MCLR with no reset (similar to standard Pension Loan Scheme). If PSU consents in writing for not transferring pension payments, standard terms apply; otherwise a premium of 50 bps may apply in some scenarios.
  • Special scenarios: If PSU consent is not provided in writing, CIBIL score must exceed 658 for eligibility; RSM score in RLMS must be ≥50; 50 bps premium payable; rules for determining adequacy of PSU undertakings outlined.

G. PENSION LOAN SCHEME to PSU PENSIONERS – Inclusion of Tata Steel Ltd. (TSL) under eligibility and ESS/VRS with annuity payments

  • Tata Steel Limited (TSL) inclusion as eligible PSU pension payer; loans to TSL employees retired under ESS/VRS with fixed annuity payments (Masik Pratidan).
  • Terms: Similar to PSU Pension Loans with ROIs and risk controls; age, tenure, and repayment caps aligned with PSU pension loan guidelines.
  • Requirements: RSM score ≥45; irrevocable undertaking from Pensioner not to amend pension mandate; TSL undertakings not to transfer pension payments; NOC issued by SBI if required.

H. CMPF Pensioners

  • Status: CMPF Pension Loans scheme withdrawn with effect from 08.06.2022 (Circular NBG/PBU/PL-PENSION/13/2022-23).
  • Guidance for CMPF pensioners whose PPOs are not maintained with CPPC:
    • Loans extended under PSU Pension Loan Scheme as applicable; post-sanction process includes notifying Dhanbad branch to mark in Master Data.
    • Processing path via RLMS: RLMS -> Pension Loan -> select ‘Public Sector Undertaking (PSU)’ -> Name of PSU -> CMPF.

I. SBI Pension Loan Scheme: Pensioners of Treasury

  • Treasury pensioners (pension disbursed via Treasury cheques or other mandate) eligible under special conditions:
    • Original PPO remains with treasury; pensioner mandates SBI branch to receive pension; irrevocable undertaking not to amend pension mandate; treasury consent in writing not to transfer pension until NOC is issued by SBI.
    • Conditions when treasury consent can be waived: CIBIL score > 658; RSM score ≥50; premium of 50 bps; other conditions in para 1(I) and II above.
  • Documentation: If PPO with treasury, obtain irrevocable undertaking and treasury consent letter; all other terms of SBI Pension Loan apply.

J. Insta Pension Loan Scheme through YONO/RINB

  • Status: Withdrawn w.e.f. 01.04.2024 (Circular NBG/PBU/PL-PERLOANS/37/2023-24 dated 27.03.2024).
  • Background: Was launched via YONO in 2020 for top-up loans up to ₹2.80 lakhs (20% of existing Pension Loan limit) for existing pension loan borrowers; also available on INB/RINB.
  • Current status: Withdrawn; references to prior product exist in Annexures and risk control matrices.

K. Appendix – List of e-Circulars consolidated in the Master Circular – Pension Loans

  • A compendium of prior circulars consolidated in the Master Circular (covers changes from 2005 to 2023-24, including RACC, PAPNL, YONO initiatives, CIBIL/CIC deviations, and processing changes).
  • Examples include: Pension loan to Treasury pensioners (2019), Jai Jawan pension loan, YONO-linked pension loan disclosures, CIBIL deviation circulars, and many others.

L. Risk Control Matrix – Pension Loan

  • Detailed risk controls across the loan lifecycle: sourcing, processing, sanction, documentation, disbursement, and post-sanction monitoring.
  • Highlights:
    • Automated processing in Retail Loans; manual steps only where required.
    • Branches must ensure SI/NACH is functioning properly for delinquency recovery.
    • Pre-sanction survey requirements and the role of RLMS in risk scoring and decisioning.
    • External agency/vendor considerations: continuity plans and risk mitigations; no external agency required for pension loans because of direct pension payments and backend checks.
    • Owner responsibilities aligned with Retail Loans department.

Annexures (Part II) – Overview

  • Annexure 1: Application-Cum-Authority Letter (branch-facing form used to initiate loan for pensioners).
  • Annexure II: Irrevocable Undertaking from Pensioner (PL-II) – Not to shift pension or amend the mandate.
  • Annexure III: Advice for not permitting shifting of pension A/C (PL-III).
  • Annexure CMPF-IV & CMPF-V: Requesting marking/noting in Master File and Confirmation of Noting in Master File (CMPF scheme).
  • Annexure I-A & I-B: Letters to pensioner/family pensioner (offer letters with loan features).
  • Annexure II-A & II-B: Top-up letters to pensioners (top-up loan offers).
  • Annexure PL-I: Undertaking from pensioner (Other deductions/loans availed by pensioner).
  • Annexure C: Pension Loan Check List for Documents (self-attested) – documents checklist including PAN, OVDs, PPO, etc.
  • Annexure-V: SOP for handling delinquent accounts (Xpress Credit & Pension Loans – all variants).
  • Annexure-VI: SOP for handling delinquent PAPL (Pre-Approved Personal Loans) – unsecured.
  • Annexure-VII: CIBIL/CIC deviations and discretionary powers – decision framework for negative CIR statuses and discretionary approvals.
  • Annexure-VIII: Irrevocable Undertaking from Pensioner (PSU Pension Loans).
  • Annexure-IX: Irrevocable Undertaking from Pension Paying Authority (PPO-realignment contexts).
  • Annexure-X: SOP from CDC-CPPC on removal of lien on pension accounts to enable processing of family pension where pension loan is outstanding.
  • Annexure-XI: Request for not permitting shifting of account to PCDA, Prayagraj in Jai Jawan Pension Loan.
  • Annexure-XII: COS 230 D.P. Note Delivery Letter.
  • Annexure-XIII: DP Note (demand promissory note).