Which banks offer debt consolidation loans for low credit scores?

PNB accepts a minimum CIBIL score of 650, making it the most accessible among banks offering debt consolidation loans for lower credit profiles. NBFCs are an alternative but charge significantly higher interest rates.

What is the interest rate on a debt consolidation loan in India?

Interest rates typically range from 10% to 24% p.a., depending on the bank and borrower profile. Public sector banks generally offer lower rates than private banks for the same credit profile.

Is a debt consolidation loan in India secured or unsecured?

Most banks offer an unsecured debt consolidation loan, meaning no collateral or asset is required. Eligibility is assessed purely on income, credit score, and existing debt obligations.

How do I choose the best bank for debt consolidation loans?

Compare the interest rate, maximum loan amount, tenure, processing fee, and prepayment charges. The best banks for debt consolidation loans for salaried borrowers with good credit are typically SBI and ICICI Bank, depending on disbursal speed and loan amount needed.

Which Banks Offer Debt Consolidation Loans in India? (2026)

Q: Which banks offer debt consolidation loans in India?

Several public and private banks offer debt consolidation loans in India, including SBI, PNB, Bank of Baroda, HDFC Bank, ICICI Bank, and Axis Bank. These banks process it as a personal loan designed to settle multiple existing debts.

Managing several loan EMIs with high interest rates is not only expensive but exhausting. If you miss one payment, it will trigger penalties across all of your accounts instantaneously. That is why a debt consolidation loan in India offers a practical solution by combining all your dues in a single yet manageable EMI.

Most borrowers come up with the same question in their minds: Which banks offer debt consolidation loans in India? Not every option suits everyone, as it depends on an individual’s financial situation. This guide will take you through the best banks offering debt consolidation loans in India, with a proper comparison of rates, eligibility, and terms to help you with informed decision-making.

What is a Bank Debt Consolidation Loan?

A bank debt consolidation loan is a type of personal loan that a bank issues to pay off several existing debts, replacing these with a single loan with a unified interest rate. So, in case of repaying to several lenders, with this loan, you need to repay one EMI to one lender only.

Key Aspects of Consolidation Loans in India

There are several areas that consolidation loans cover, and these are:

Outstanding balances of credit card
Outstanding personal loans
Consumer durable loans
Other EMIs and unsecured credit

How It Differs From Regular Personal Loans

Personal loans in general can be used for any purpose, whereas debt consolidation loans are structured to unify existing liabilities. Some banks directly transfer the funds to your creditors; however, this depends on eligibility criteria, documentation, and sometimes the interest rates of banks differ based on your existing debt profile.

Banks offering debt consolidation loans examine your present financial obligations, repayment history and overall debt-to-income ratio before they approve you for any consolidated amount.

Check Your Debt Consolidation Loan Eligibility

Which Banks Offer Debt Consolidation Loans in India?

There are debt consolidation lenders from both the public and private banking sectors in India; however, most of these banks don’t market the product with the exact same name. This is typically marketed as a personal loan meant for debt repayment. The key difference is based on processing speed, interest rates, and eligibility factors. Public banks offering debt consolidation loans at lower interest rates have strict eligibility criteria and a slower processing time. Whereas private banks often approve debt consolidation loans faster with more flexibility and higher interest rates.

Here’s a comparison table of general aspects of debt consolidation loans in India between public and private banks

Parameter	Public Sector Banks	Private Sector Banks
Interest Rate Range	10% – 14% p.a.	11% – 24% p.a.
Processing Speed	5–10 working days	2–5 working days
Eligibility and Flexibility	Stricter	More flexible
Loan Amount	Up to ₹20 lakh	Up to ₹40 lakh
Prepayment Charges	Nil to low	Low to moderate
Best Suited For	Salaried, stable income	Salaried & self-employed

Public Sector Banks Offering Debt Consolidation Loans in India

The best banks for debt consolidation loans in the public sector consist of three names that stand out for their eligibility criteria and rate competitiveness. These are:

1. State Bank of India (SBI)

SBI processes debt consolidation loans through its Xpress Credit scheme, especially for existing salary account holders. Their interest range can vary from 10.05% to 15.05% per annum. Their loan amount can go up to ₹35 lakh with a maximum loan repayment tenure of up to 7 years. Defence and government employees can have a preferential rate. In case of non-SBI account holders, they can receive a similar loan through the Quick Personal Loan scheme with higher interest rates. Although there are no prepayment charges, a processing fee can be 1.5% of the loan amount. A high CIBIL score of 750 or above is preferred for this loan.

2. Bank of Baroda (BoB)

This bank considers debt consolidation as a part of its Baroda Personal Loan. Their floating interest rates vary from 10.15% to 17.50% per annum with a maximum tenure of up to 84 months. Government salary account holders don’t have to pay any processing fees, while others are charged with 1% to 2% of the loan amounts. There are no prepayment charges, but low credit score consolidation loan is not possible in this case.

3. Punjab National Bank (PNB)

One cannot avail a debt consolidation loan low credit score of 650 and below. Their interest rates can vary between 10.25% to 16.80% per annum, and their loan amount can go up to ₹20 lakh with a maximum repayment tenure of 72 months. This can be the most accessible option among public debt consolidation lenders. Defence and paramilitary people with a salary account in this bank can avail this loan with an interest rate starting from 10.25% per annum, with a maximum of 1% processing fee of their loan amount, with no prepayment penalty.

Here is a comparison table of public sector banks for a debt consolidation loan India

Parameter	SBI	Bank of Baroda	PNB
Interest Rate	10.05% – 15.05% p.a.	10.15% – 17.50% p.a.	10.25% – 16.80% p.a.
Max Loan Amount	₹35 lakh	₹20 lakh	₹20 lakh
Max Tenure	7 years	7 years	6 years
Min. CIBIL Score	750	750	650
Processing Fee	Up to 1.5%	1%–2% (Nil for govt.)	Up to 1%
Prepayment Charges	Nil	Nil	Nil

Get a Debt Consolidation Loan with Flexible EMIs

Private Sector Banks Offering Debt Consolidation Loans in India

Private banks are offering active debt consolidation loans in India primarily due to their faster processing time, higher loan amounts and flexibility in eligibility factors. Even self-employed people can access unsecured debt consolidation loans with no collateral from the banks mentioned below.

1. HDFC Bank

It is one of the leading private personal loan providers with a faster disbursal time, with interest rates varying between 10.40% and 24.16% per annum, with a maximum tenure of up to 6 years. Loan amounts can go upto ₹40 lakh, depending on the borrower’s profile. Their processing fee can be up to 2.50% for salaried individuals, and prepayment charges are applicable on the reducing slabs.

2. ICICI Bank

They offer an unsecured debt consolidation loan with interest rates varying between 9.99% to 16.50% per annum. They offer a maximum loan amount of up to ₹50 lakh. If anyone compare debt consolidation banks in the private sector, then ICICI is the one providing a maximum repayment tenure of up to 6 years, with a processing fee of 2% on the loan amount. Existing customers of the bank and pre-approved borrowers can benefit from faster disbursement with competitive rates.

3. Axis Bank

They offer personal loans ranging from ₹50,000 to ₹40 lakh with interest rates varying between 9.99% and 22% per annum with a tenure of up to 7 years. If anyone compare debt consolidation banks, this is the longest tenure period among private banks. A strong CIBIL score is required in this case, and as it offers the longest repayment tenures, EMIs are lowered for borrowers with a bigger consolidated amount.

Here is a comparison table of the private sector banks offering debt consolidation loans

Parameter	HDFC Bank	ICICI Bank	Axis Bank
Interest Rate	10.40% – 24.16% p.a.	9.99% – 16.50% p.a.	9.99% – 22% p.a.
Max Loan Amount	₹40 lakh	₹50 lakh	₹40 lakh
Max Tenure	6 years	6 years	7 years
Min. CIBIL Score	750	750	750
Processing Fee	Up to 2.50%	Up to 2%	Up to 2%
Prepayment Charges	Yes (slab-based)	Applicable	Applicable

Comparison of Public and Private Debt Consolidation Loan Providers

To further provide insight into the comparison between public and private lenders of debt consolidation loans, here is a comparison table providing quick insights.

Parameter	SBI	Bank of Baroda	PNB	HDFC Bank	ICICI Bank	Axis Bank
Interest Rate	10.05%–15.05%	10.15%–17.50%	10.25%–16.80%	10.40%–24.16%	9.99%–16.50%	9.99%–22%
Max Loan Amount	₹35 lakh	₹20 lakh	₹20 lakh	₹40 lakh	₹50 lakh	₹40 lakh
Max Tenure	7 years	7 years	6 years	6 years	6 years	7 years
Min. CIBIL Score	750	750	650	750	750	750
Processing Fee	Up to 1.5%	Nil–2%	Up to 1%	Up to 2.50%	Up to 2%	Up to 2%
Prepayment Charges	Nil	Nil	Nil	Yes (slab-based)	Applicable	Applicable
Best For	Govt./salaried, low cost	Govt. employees, early closure	Lower CIBIL, defence	Fast disbursal, high amount	Highest loan amount	Longest tenure, flexibility

NBFCs vs Banks for Debt Consolidation Loans

When comparing banks with NBFCs as debt consolidation loan providers, you need to consider the points below-

1. Banks

For banks, look for the aspects below:

Should have an overall lower interest rate, making them the best banks for debt consolidation loans to individuals with a good credit profile.
Comes with stricter eligibility criteria, like a good CIBIL score and valid income documentation
Comes with zero prepayment and longer tenure options, especially for public banks
Provides higher credibility as per the RBI’s banking framework.

2. NBFCs

For Non-Banking Financial Companies, consider the following aspects:

Provides more flexibility, even people with no regular income can access a debt consolidation loan low credit score situation
Although it comes with flexible eligibility and faster approvals but has higher interests, ranging from 18% to 36% p.a.
Comes with a higher processing fee and shorter repayment tenures, hence not a cost-effective option

Hence, qualifying for a bank loan can be a smarter option for the majority of individuals who have a regular income.

Debt Consolidation Loans for Low Credit Score

A borrower aiming for a low credit score consolidation loan from a mainstream bank is challenging, as most banks need a CIBIL score of 750 and up based on income stability, existing banking relationship and employer profile. However, fewer exceptions exist, which are presented in tabular format below-

Bank/Lender	Min. CIBIL Score	Notes
PNB	650	One of the most accessible public banks for low-credit applicants
SBI	700 (case-by-case)	Possible for existing salary account holders
Bank of Baroda	700 (case-by-case)	Considered with strong income proof
NBFCs (e.g. Bajaj Finserv)	600–650	Higher rates apply; last resort option

If you want to pursue a debt consolidation loan low credit score route, you can adhere to three practical steps:

Applying with your existing bank where your salary gets credited, or you hold a savings account
Clearing outstanding dues before the application
Having a co-applicant with a strong CIBIL score for improving eligibility

Interest Rates and Charges Across Banks

Bank debt consolidation loan rates depend on a range of factors which are not even advertised by banks. Here are the factors which drive differences-

Factor	Lower Rate Outcome	Higher Rate Outcome
CIBIL Score	750 and above	Below 700
Employer Type	Govt./PSU/defence	Self-employed or private SME
Loan Amount	Higher loan, strong profile	Small loan, thin credit history
Banking Relationship	Existing salary/savings account	New to the bank
Tenure Chosen	Shorter tenure	Longer tenure

Compare Debt Consolidation Loan Interest Rates

How to Choose the Best Bank for Debt Consolidation

When considering which banks offer debt consolidation loans, it should be kept in mind that there is no single option that fits everyone, and hence, your decision should be based on the framework below-

Your Priority	Best-Suited Option	Why
Lowest interest rate	SBI or PNB	Public banks offer the most competitive starting rates
Highest loan amount	ICICI Bank	Offers up to ₹50 lakh: the highest among all six banks covered
Longest repayment tenure	SBI or Axis Bank	Both offer up to 7 years, keeping EMIs manageable
Low credit score	PNB or NBFC	PNB accepts 650; NBFCs go lower but at higher rates
Fastest disbursal	HDFC or ICICI Bank	Pre-approved customers get same-day or 10-second disbursal
Zero prepayment penalty	SBI, BoB, or PNB	All three public banks charge nil on foreclosure
Self-employed borrower	ICICI or Axis Bank	More flexible eligibility for non-salaried profiles

Eligibility and Documents Required

There are certain eligibility factors that influence bank debt consolidation loan options. They are mentioned in tabular format below-

Parameter	Typical Requirement
Age	21–60 years
Employment Type	Salaried or self-employed
Min. Monthly Income	₹25,000 (banks); varies for NBFCs
Min. CIBIL Score	650–750, depending on the bank
Work Experience	1–2 years minimum
Existing Relationship	Preferred but not mandatory

Also, there are certain documents that you will need to avail a consolidated loan from a lender.

Document Type	Examples
Identity Proof	Aadhaar, PAN Card
Address Proof	Aadhaar, utility bill, passport
Income Proof	Last 3 months' salary slips or ITR
Bank Statements	Last 6 months
Existing Loan Details	Statements of loans to be consolidated

How to Apply for a Debt Consolidation Loan

To apply for a debt consolidation loan in India, you need to follow this sequence-

Checking CIBIL Score: Ensure you have a good CIBIL score before approaching a lender.
Listing All Existing Debts: Ensure you note all outstanding amounts with interest rates and remaining tenure for each loan/credit card
Comparing Banks: Using all the tables above, you can shortlist your credit profile with loan requirements
Applying Online/at a Branch: Most banks offer debt consolidation loans application through net banking, mobile app, or directly at their office.
Submitting Documents: Make sure you have all the required documents mentioned above before you approach a lender.
Upon Lender’s Approval: Confirm with the lender if the funds will be transferred directly to your existing lender or to your bank account
Setting up Auto-Debit: Avoid missing future repayments by setting up auto-debit options in your account.

Conclusion

Managing multiple debts becomes much comprehensive and simple when consolidated into one structured loan. Whether you prioritise the lowest rate from a public sector bank or the faster disbursal of a private bank, the right choice depends entirely on your credit profile, income stability, and repayment capacity. Always compare the total loan cost and not just the interest rate before deciding. For more such guides on debt consolidation, personal loans, and smart borrowing in India, visit My Mudra's website to make better-informed financial decisions.

Also Read:
- Latest Debt Consolidation Loan Rates in India – Compare Interest Rates
- How Debt Consolidation Can Save Your Money

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Which Banks Offer Debt Consolidation Loans in India? (2026 List)