Objective of the Scheme
The Educational Loan Scheme outlined below aims at providing financial support from the banking system to deserving/ meritorious students for pursuing higher education in India and abroad. The main emphasis is that every meritorious student though poor is provided with an opportunity to pursue education with the financial support from the banking system with affordable terms and conditions. No deserving student is denied an opportunity to pursue higher education for want of financial support.
The scheme details are as under:
- Should be an Indian National.
- Secured admission to professional/ technical courses in India or Abroad through Entrance Test/ Merit Based Selection process.
a. Studies in India: (Indicative list)
- Graduation courses : BA, B.Com., B.Sc., etc.
- Post Graduation courses : Masters &Phd.
Professional courses : Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc.
Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to university.
Courses like ICWA, CA, CFA etc.
Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.
Regular Degree/Diploma courses like Aeronautical, pilot training, shipping etc., approved by Director General of Civil Aviation/Shipping, if the course is pursued in India. In case the course is pursued abroad, the Institute should be recognized by the competent local aviation/shipping authority.
Courses offered in India by reputed foreign universities.
Evening courses of approved institutes.
Other courses leading to diploma/ degree etc. conducted by colleges/ universities approved by UGC/Govt./ AICTE/AIBMS/ICMR etc
Courses offered by National Institutes and other reputed private institutions. Banks may have the system of appraising other institution courses depending on future prospects/ recognition by user institutions.
Courses, which are not covered under the criteria mentioned above, individual banks may take a view to consider extending.
Education loan under the scheme taking into account the future prospects/recognition by user institution.
b. Studies abroad
- Graduation : For job oriented professional/ technical.
- courses offered by reputed universities.
- Post graduation: MCA, MBA, MS, etc.
Courses conducted by CIMA – London, CPA in USA etc.
Requirements for availing education loan:
- The borrower and surety/coobligants should have Account with the Bank Branch fulfilling the KYC norms
- Attested copies of Conduct Certificate, Certificates/Marks Cards of previous examinations including SSLC
- Copy of Admission letter from the college for the present course
- Copy of CET selection letter
- Details of Expenditure – College Fees, hostel expenses and other expenses for the entire course
- Copy of Passport and Visa in respect of studies abroad
- Two copies of recent PP size Photographs
- Details of security offered in case of limit above Rs.4.00 Lacs
- Certificate of income of parent/guardian/coobligant
In case of security by way of mortgage of landed property:
- Regd Title Deed
- Revenue Tax Certificate
- Encumbrance Certificate
- Tax Paid Receipt
- Legal Opinion of the Bank’s Legal Advisor
- Valuation of property by the approved Valuer of the Bank
Before seeking admission to any college/university,please verify whether the University is black
listed either from UGC in India and from concerned embassies incaseof overseas studies. Courses conducted by CIMA-London,CPA in USA etc.
QUANTUM OF FINANCE
Need based finance subject to repaying capacity of the parents/ students with margin and the following ceilings.
- Studies in India – Maximum Rs.10.00 lacs.
- Studies abroad – Maximum Rs.20 lacs
|Upto Rs. 4 lacs||Nil|
|Above Rs. 4 lacs : Studies in India||5%|
- Scholarship/ assistantship to be included in margin.
- Margin may be brought-in on year-to-year basis as and when disbursements are made on a pro-rata basis.
Upto Rs. 4 lacs
|Co-obligation of parents. No security.|
|Above Rs.4 lacs and upto Rs7.5 lakhs||Co-obligation of parents together with collateral security in the form of suitable third party guarantee. The bank may, at its discretion, in exceptional cases, waive third party guarantee if satisfied with the net-worth / means of parent/s who would be executing the document as “joint borrower”.|
|Above Rs.7.5 lakhs||Co-obligation of parents together with tangible collateral security of suitable value, along with the assignment of future income of the student for payment of instalments.|
The loan documents should be executed by both the student and the parent/ guardian as joint-borrower.
The security can be in the form of land/ building/ Govt. securities/ Public Sector Bonds/Units of UTI, NSC, KVP, life policy, gold, shares/mutual fund units/debentures, bank deposit in the name of student/ parent/ guardian or any other third party with suitable margin.
Wherever the land/ building is already mortgaged, the unencumbered portion can be taken as security on second charge basis provided it covers the required loan amount.
In case the loan is given for purchase of computer, the computer has to be hypothecated to the Bank.
RATE OF INTEREST
As per norms of banks
- Simple interest to be charged during the Repayment holiday/Moratorium period.
- Penal interest to be charged as per norms of banks.
The loan is repayable in 5-7 years and repayment of loan commences one year after successful completion of the course OR six months after getting job whichever is earlier.
State Governments have also come forward to provide interest subvention on educations loans of those students from poor classes of family qualify for professional courses through common entrance test (CET). The Central Government also bears the burden of the entire interest component payable for the period of moratorium i.e., course period plus one year or six months after getting the job whichever is earlier. The students belonging to economically weaker sections with an annual gross parental/family income from all sources with an upper limit of Rs.4.5 lakhs.
CENTRAL SCHEME FOR INTEREST SUBSIDY
Central Scheme for Interest Subsidy has been announced by Ministry of HRD for providing interest on Education Loans during moratorium for technical and professional courses for studies in India under the IBA Model Education Loan Scheme for students from economically Weaker Sections (EWS) with annual gross parental/family income up to 4.50 lacs per annum from the academic year 2009-10.
1. Applicability of the Scheme
The scheme would be applicable only for studies in recognized Technical/Professional courses in India. The interest subsidy shall be linked with the existing Education Loan Scheme of IBA and restricted to students enrolled in recognized Technical/Professional courses (after class XII) in India in Educational institutions established by Acts of Parliament, other institutions recognized by the concerned Statutory Bodies, Indian Institutes of Management (IIMs) and other institutions set up by the Central/State Government. Under IBA Model Education Loan Scheme for studies in India maximum eligible loan limit is `10 lacs.
2. Moratorium Period
The subsidy is provided for the period of moratorium i.e. course period plus one year or six months after getting job whichever is earlier as prescribed under the IBA Model Education Loan Scheme. After the moratorium period is over, the interest on the outstanding loan amount shall be paid by the student in accordance with the provisions of the Education Loan Scheme.
3. Criteria for Economically Weaker Section/ Income Limit
The benefit of the scheme would be applicable to those students belonging to economically weaker sections with an annual gross parental/family income with upper limit of ` 4.5 lacs per year (from all sources).
4. Competent Authority to issue Certificate
The Ministry of HRD, Government of India has issued an Advisory to all the State Governments requesting them to designate appropriate authority or authorities who are competent to issue income certificates, based on economic index and not social background for the purpose of this scheme.
5. Eligibility for Interest Subsidy
The interest subsidy under the scheme shall be available to the eligible students only once either for the first undergraduate degree course or the post graduate degree/diploma in India. Interest subsidy shall however, be admissible for integrated courses (graduate plus postgraduate). Interest subsidy under this scheme shall not be available for those students once they discontinue the course midstream, or who are expelled from the institutions on disciplinary or academic grounds. However, the interest subsidy will be available only if the discontinuation was due to medical grounds for which necessary documentation to the satisfaction of the Head of educational institution will have to be given.
6. Applicable Academic Year
The scheme shall be applicable from the academic year 2009-10 starting 1st April 2009. The scheme shall be applicable only in respect of disbursements made by the Banks on or after 1st April, 2009 for the academic year 2009-10, irrespective of date of sanctioning. In case of loans sanctioned prior to 1.4.2009, for the courses beginning prior to academic year 2009-10, the interest subsidy is available to the extent of disbursements made after 1.4.2009.
7. Disbursement of Interest Subsidy Claims
The disbursement of Interest Subsidy Claims to the Banks shall be on half-yearly or yearly basis which has to be worked out in consultation with the Ministry of HRD.
8. Eligible students have to contact the Bank Branch concerned for any further details along with Income Certificate from the certifying authority.
The latest development is that Accidental Death Insurance cover to the students and parents is mandatory.