New Delhi: The scenario of borrowing cash is changing fast in the Kashmir valley. People who used to earlier borrow for their needs from family, friends or moneylenders are now finding favor with banks.

A quick cash loan with minimum documentation, no guarantee or collateral, low interest and easy repayment option have made the small ticket personal loans a preferred method of borrowing. Banks are now willing to lend amounts as much as 90 percent of the annual income of a borrower. A good feature of these personal loans is that they are disbursed without any question asked about its end use.

With banking awareness spreading rapidly across the valley, people have even started to compare offers before deciding on one. The robust banking structure in India has given them many options and each bank is competing with others to get their share of customers. In this process they often relent on better terms if they find that a particular customer is 'good' and will repay the loan in its entirety with minimum hassles.

Though other retail loan products like car loan, two-wheeler loan, educational loans, credit cards and home loans are also available in the state but the popularity and off-take of personal loans has far outpaced the growth of other segments.

J&K Bank has been the star performer in this segment and with an extensive network of more than 450 branches, it has been instrumental in bringing the banking revolution to even the remotest part of the state. The bank has been providing a consumption loan for employees of state and central governments, public sector undertakings, and self employed individuals. The amount of loan given depends on the net monthly income of the applicant. Loan amounts up to 30 times the net monthly income or Rs. 5.00 lakhs whichever is lower can be obtained with a nominal processing charge of 0.50 percent of the loan amount at very competitive interest rates.

It seems that personal loans seem to be fairly easy to procure in J&K, and the sub-prime segment is getting them easy, which is a dangerous situation to have. This brings into perspective the strong arm tactics being used by banks for loan recovery in the rest of the country, which have attracted widespread criticism in the last few weeks. Wonder how long the sub-prime segment in J&K would keep getting easy personal loans.