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People on Benefits is a relatively strange term for India. This concept has been in existence in the USA, Europe and UK. The term ‘People on Benefits’ originated in the United Kingdom as it used to run as a welfare country. Help and support to the poor and downtrodden were provided so that they can live. This support is built into the Government budget and is borne through taxes by other citizens. When there are more poor people or higher number of unemployed, there comes a situation when people live on these benefits from the Government.
More often than not, it is difficult to live a decent life on these benefits alone. It barely meets the needs of a family. These benefits are available to such category of people, free of cost. Some of the main benefits received is on health, child, unemployment and home. These items are offered as allowances for low income people or the unemployed.
About Loans for People on Benefits
Benefits alone does not suffice to live a decent life. The cost of living is high and without a regular source of income, it becomes difficult to meet basic needs. It is generally understood that people on benefits do not find it easy to get loans due to lack of financial stability. However, there are lenders who offer loans to people on benefits. Some of these loans are:
Secured Loans :
A loan is offered with a security collateral and most of the times, this is a car. The interest rate tends to be lower in this case.
Home Finance Loans :
This loan can be availed by those people who have been living on benefits for some years. The money can be used for any purpose; however, repayments happens on a weekly basis. This type of loan is quite expensive.
Budget Loans :
This type of loan is interest free with long tenure of repayment. It is available to those who have been claiming the benefits for a year.
Payday Loans :
This loan is rather expensive as the loan amount is small and attracts higher rate of interest. It can be repaid when benefits are received by the borrower.
Loans for people on benefits is a special type of loan. Some of the features of this product are:
Loan for People on Benefits – Indian Context
While loans for people on benefits does not exist in India, there is a similar scheme that is available in the country. The Government rolls out many welfare schemes for the poor, senior citizens and some minority communities. They get access to Government Healthcare Services, schools, discounted food items and so on. Special schemes are designed by the Government from time to time to support the basic needs of the poor and below poverty line people.
Swarna Jayanthi Shahri Rozgar Yojana is a specially designed loan aimed at people living below poverty line. It helps in providing some employment opportunity and help the individual to be self-sufficient. The loan can be availed by the unemployed both in rural and urban areas. Maximum loan amount available is Rs. 50,000 to set up a business. Women get extra subsidy up to 50% of the project cost. Repayment period varies from 3 to 7 years.
Swarna Jayanti Gram Swarozgar Yojana is another type of loan that helps in self-employment opportunities across the rural areas of the country. Loan amount varies from Rs. 50,000 and can go up to Rs. 6 Lakhs. Different subsidies are available depending on the background and the need. Repayment period varies from 5 to 9 years.
Prime Mininster’s Employment Generation Scheme is aimed at creating employment opportunities for those not having a regular source of income in both rural and urban areas. This loan helps in setting up a self-employment business. The loan amount available is high at Rs. 25 Lakhs. Repayment period can be between 3 and 7 years.
Documents and eligibility required to avail these schemes from the Government are:
1. What is meant by people on benefits?
When an unemployed or poor individual lives off the benefits given by the Government, they are called people on benefits. This system is operational in the western countries.
2. Does the concept of people on benefits exist in India?
No, the concept of people on benefits does not exist in India and is mostly followed in the western part of the world.
3. What is EMI?
EMI stands for Equated Monthly Instalments wherein you repay a loan taken in equal instalments for an agreed period.
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