Banks offer several facilities to businesses and individuals to meet their long and short-term needs. The volume of consumer financing is always smaller than corporate financing, but the former is more complicated because of the large number of borrowers. Banks’ borrowing facilities for consumers in Pakistan are house financing, car financing, credit cards, and personal loans. The purpose of all these loans is the same: to meet the funding requirements of individuals. When it comes to consumer financing, National Bank of Pakistan (NBP) is one of the leaders. A government-owned bank with a presence in nearly all the cities of Pakistan, from the north to the south and from the east to the west of the country. The bank has its head office in Karachi and has over 1500 branches nationwide. The bank has a substantial participation in commercial, consumer, and public lending. NBP personal loan is being marketed under the brand name ” NBP Advance Salary”. NBP is offering a tailored product to consumers to meet their funding requirements. Let us look at the features, terms & conditions, and benefits NBP Advance Salary offers.
Key Features of NBP Advance Salary Personal Loan
The idea behind NBP’s advance salary is to extend a loan to individuals relative to their income. The amount you are entitled to avail is calculated based on your net salary, existing loans, credit cards, and credit history. The loan has the following features:
- An individual can avail of around twenty times his net income. Put another way. You can avail of an amount equal to your twenty net salaries.
- Contractual employees can avail of a maximum of Rs.2,000,000.
- Permanent employees can avail of a maximum of Rs.3,000,000.
- The maximum tenure of a personal loan is four years.
Eligibility Criteria
Every loan by every bank has eligibility criteria to ensure that the bank does not end up with a non-performing loan. The eligibility criteria for the NBP Advance Salary loan include the following:
- You must be an adult with a valid CNIC/NICOP card.
- You must be a permanent or contractual employee of a public or private entity.
- You must have a clean CIB report (No defaults).
- You must have your salary account in NBP.
- Permanent employees should not be more than 59 years old, and contractual employees should not be more than 55 years old at the time of application.
- Minimum experience of 1 year with your current employer.
- There is no minimum salary requirement.
- No security or collateral is required.
- Two references are required. These can be your colleagues.
Documents and Other Requirements
You need to provide the following to avail of the personal loan:
- Copy of your valid CNIC.
- Copy of CNICs of two references.
- Copy of your employee card and that of the references.
- Your salary slip (Last three months) or a salary certificate.
- PEP undertaking (Politically exposed person).
- Customer Undertaking.
- Employer Undertaking.
- Filled application form (You can download this from NBP’s website).
Markup, Installments, and Other Charges
The markup/profit rate on personal loans across all banks in Pakistan hardly has a considerable difference. As these are the riskiest of all loans, the markup rate is usually high. NBP charges a fixed markup rate of 23.5 % per annum on the outstanding amount. That works out to be approximately 3 % per month. Your monthly instalment will consist of a principal instalment and a monthly markup. The bank will also charge you a loan processing fee which will be around Rs.2000 or 2% of your financing amount (whichever is higher). The maximum fee cannot exceed Rs.20,000. You might also be charged a small amount for verification and legal documents. Whenever you avail of any loan, it is wise to first calculate the monthly instalment you will have to pay. This way, you can know if you can conveniently pay your loan. Otherwise, you can end up with a serious debt burden. You can use the national bank personal loan calculator to calculate your monthly instalments.
Using the National Bank of Pakistan Personal Loan Calculator
NBP has made an online calculator which you can use to calculate your monthly instalment.
- Select your employment type, whether contractual or permanent.
- Enter your desired loan amount, for instance, Rs.1,000,000.
- Choose the loan tenure you prefer, for instance, 48 months.
- Click on the “calculate monthly instalment” button.
- Your monthly instalment will be calculated. For instance, if you are a permanent employee and want to avail of a loan of Rs.1,000,000 for 48 months, your monthly instalment will be Rs. 32326.
NBP Offline and Online Application Form
To apply for NBP’s Advance Salary loan, you have several options. You can visit your branch where your salary account is parked with all the required documents mentioned above. Ask the business development manager (BDO) at the branch to provide you with a loan application form for advance salary. Fill out the form right there or ask help from the BDO in filling the form. Sign the form and attach all necessary documents. Ask for a photocopy of the complete set, which you can keep with yourself for future reference. You can also download the form from NBP’s website. The form requires personal data (name, father’s name, CNIC number, etc.), employment data (occupation, experience, employer details, etc.), and your finance request (finance amount, tenor, etc.). NBP now also offers the option of applying online for an advance salary loan. The online application form is much more straightforward and easy to fill out. It allows you to apply for your personal loan from the comfort of your home.
Loan Processing Time
The loan processing time of NBP’s advance salary loan depends on several factors. The loan processing procedure has many steps. The first step is to check your application form and your documents. It is essential to fill in all the information correctly because the bank will take its time to process your application, and if there is any error or wrong information, the processing time will increase. The bank will ask you to provide valid documents or refill the application form if there is any mistake. Select the right amount of loan. Use the NBP personal loan calculator to calculate the instalment you can tolerate and select the loan amount accordingly. The second step in loan processing is verification. The bank verification department may verify your details physically as well. They might send someone to your office or call your office. They might send someone to your neighbourhood to inquire about you. Once your verification is clear, the marketing department will send your loan proposal to the risk department, which will go through the complete details of your application and either approve or reject it. If approved, the risk department will send the approval to the marketing department, which will inform you regarding the status of your application. Further time will be taken to disburse the loan to your existing account. Because NBP’s advance salary loan requires you to have your salary account with NBP, your loan will be disbursed right away.
Comparison With Other Banks
Nearly all banks in Pakistan offer personal loans to consumers. Many require that you open an account with them, with a few exceptions. Almost all demand the same markup rate and eligibility criteria. Significant differences only exist between Islamic and non-Islamic loans, as they have different modalities. When you compare conventional personal loans, NBP’s advance salary product is ranked considerably higher because of the ease it offers to existing NBP account holders. For the bank, it provides a comparatively less risky investment as the loans are extended only to people already receiving their salaries through NBP accounts. The terms & conditions of the NBP personal loan are also not that stringent. However, you can expect the processing time to be comparatively high. That’s because NBP is a government bank and caters to a huge number of clients. It receives a very high number of applications every day, resulting in a higher processing time.
