Starting from October 1, 2025, customers of three of India’s largest public sector banks State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BOB) will be eligible to receive a credit facility of up to ₹1 lakh.
This move is set to bring significant relief and financial flexibility to millions of banking customers across the country. Let’s dive into the details of this new initiative, understand what it means for the customers, and explore the impact it might have on the Indian banking landscape.
What Is the ₹1 Lakh Credit Facility?
The ₹1 lakh credit facility is essentially a pre-approved credit limit extended to eligible customers of SBI, PNB, and BOB. This credit is designed to help account holders manage their short-term financial needs without undergoing a lengthy loan approval process. Customers can access this credit amount directly in their accounts, making it a convenient source of funds for emergencies or planned expenses.
The idea behind this facility is to empower bank customers by offering them quick liquidity, encouraging responsible borrowing, and reducing dependency on costly credit options like personal loans or credit cards. Unlike traditional loans, this credit comes with simpler terms and faster disbursal, making it an attractive option for many.
Who Is Eligible for This Credit Facility?
Eligibility for the ₹1 lakh credit facility will be determined based on several criteria set by each bank. While specific parameters might vary slightly between SBI, PNB, and BOB, the general prerequisites include having a good account history, regular transactions, and a minimum tenure of holding a savings or salary account with the bank.
The banks will analyze the customer’s account behavior, income flow, and credit score before approving the credit limit. This ensures that only customers with a responsible banking history gain access, thereby minimizing the risk of defaults.
It’s important to note that this facility is not an automatic entitlement for all customers. Eligible customers will receive notifications from their banks, either through SMS or email, informing them about their credit limit and how to avail it.
How Will Customers Access the Credit?
Once customers receive confirmation about their ₹1 lakh credit limit, accessing the funds will be seamless. The credit amount will be linked directly to their savings or current account. Customers can withdraw the funds via net banking, mobile banking apps, ATM withdrawals, or even through cheque issuance, just like their regular account balance.
Repayment terms are designed to be flexible. The credit will typically be treated as a short-term loan that must be repaid within a stipulated period, generally ranging from 30 to 90 days. Interest rates applicable to this credit facility will be competitive, usually lower than those on credit cards or personal loans, making it cost-effective.
This facility is particularly useful in managing cash flow gaps or meeting unexpected expenses without the hassles of applying for a formal loan. Customers should, however, ensure timely repayments to avoid penalties or adverse impacts on their credit score.
Why Are Banks Offering This Facility Now?
The introduction of this credit facility by SBI, PNB, and BOB comes at a time when financial inclusion and digital banking are gaining strong momentum in India. By offering pre-approved credit to a large base of customers, these banks aim to deepen customer engagement and enhance loyalty.
Moreover, this initiative helps banks tap into the growing demand for quick, hassle-free credit, especially from salaried individuals and small business owners who often face liquidity crunches. It also reduces dependency on informal credit channels, which are typically expensive and unregulated.
From a strategic perspective, this credit facility will likely help banks increase their retail loan portfolio while managing risks through advanced analytics and customer behavior monitoring. It also aligns with the government’s vision of empowering citizens with easier access to credit.
What Are the Benefits for Customers?
The primary advantage for customers is easy and quick access to funds up to ₹1 lakh without the usual paperwork and delays associated with loans. This can prove invaluable in emergencies such as medical expenses, urgent repairs, or sudden business needs.
Since the credit is linked to existing accounts, there is no need to submit additional documentation or undergo credit appraisal each time. The process is automated and transparent, offering convenience and peace of mind.
Additionally, the interest rates on this facility are expected to be lower than other unsecured credit options. Customers can avoid exorbitant interest charges and still meet their short-term financial needs efficiently.
The initiative also encourages better credit discipline. Since the facility is pre-approved and monitored, customers are incentivized to maintain good repayment behavior, which in turn helps build their credit profile.
Possible Challenges and Considerations
While the ₹1 lakh credit facility sounds promising, customers should approach it with caution. It is still a form of borrowing, and non-repayment or delays can result in penalties and negatively affect credit scores.
Some customers might be tempted to treat this credit as free money, which could lead to financial stress. Responsible borrowing and careful financial planning will be essential to avoid over-indebtedness.
Additionally, not all customers may be eligible, which could lead to disappointment among some account holders. Banks will need to communicate clearly and transparently about eligibility criteria and repayment terms to maintain trust.
From the bank’s perspective, managing the risk of defaults while offering such a broad facility will require robust credit monitoring systems and customer education efforts.
Impact on the Indian Banking Sector
The launch of this credit facility by three major public sector banks is likely to set a precedent for other banks and financial institutions. The move could lead to a more competitive credit environment, prompting private banks to offer similar or better pre-approved credit products.
It may also accelerate the adoption of digital banking services, as customers will need to access and manage their credit via mobile apps and internet banking platforms.
By empowering millions of customers with instant credit, the initiative could contribute to greater financial inclusion, supporting India’s larger economic goals. It may also encourage a shift away from informal lending and boost consumer confidence in formal banking channels.
Banks will likely use data analytics and artificial intelligence to fine-tune credit risk assessments, ensuring a balance between customer convenience and financial prudence.
Final Thoughts
The ₹1 lakh credit facility coming into effect on October 1, 2025, for SBI, PNB, and BOB customers represents a significant development in the Indian banking sector. It offers a practical solution for managing short-term financial needs with minimal hassle.
For customers, this is an opportunity to gain financial flexibility while building a healthier credit profile, provided they use the facility responsibly. For the banks, it is a strategic move to enhance customer loyalty, increase retail credit penetration, and stay competitive in a rapidly evolving financial landscape.
As the launch date approaches, customers are advised to keep an eye on official communications from their banks and understand the terms and conditions of the facility. Proper financial planning and timely repayments will be key to making the most of this new offering.
With this initiative, the future of banking in India looks more inclusive and customer-friendly, promising a better credit experience for millions across the nation.
Disclaimer: The information provided is for general awareness only and does not constitute financial advice. Terms and eligibility for the ₹1 lakh credit facility may vary by bank. Customers should verify details with their respective banks before availing the service. Use credit responsibly to avoid financial risks.