Revised Model Educational Loan Scheme for Pursuing Higher Studies India and Abroad - Prepared by Indian Bank's Association
Education is central to the Human Resources Development and empowerment in any country. National and State level policies are framed to ensure that this basic need of the population is met through appropriate public and private sector initiatives. While government endeavour to provide primary education to all on a universal basis, higher education is progressively moving into the domain of private sector. With a gradual reduction in government subsidies higher education is getting more and more costly and hence the need for institutional funding in this area.
The scope of education has widened both in India and abroad covering new courses in diversified areas. Development of human capital is a national priority and it should be the endeavour of all that no deserving student is denied opportunity to pursue higher education for want of financial support. Loans for education should be seen as an investment for economic development and prosperity. Knowledge and information would be the driving force for economic growth in the coming years.
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Secured admission to professional/ technical courses in India or Abroad through Entrance Test/ Merit Based Selection process.
- 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.
- 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.
- Fee payable to college/ school/ hostel.
- Examination/ Library/ Laboratory fee.
- Purchase of books/ equipments/ instruments/ uniforms.
- Caution deposit, Building fund/refundable deposit supported by Institution bills/receipts, subject to the condition that the amount does not exceed 10% of the total tuition fees for the entire course.
- Travel expenses/ passage money for studies abroad.
- Purchase of computers - essential for completion of the course.
- Insurance premium for student borrower.
- Any other expense required to complete the course - like study tours, project work, thesis, etc.
Studies in India - Maximum Rs.10.00 lacs. Studies abroad - Maximum Rs.20 lacs
|Studies in India||Upto Rs 4 lacs||Nil|
|Above ₹ 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 installments|
|Upto Rs 4 lacs||BPLR|
|Above ₹ 4 lacs||BPLR + 1%|
|Simple interest to be charged during the Repayment holiday / Moratorium period.|
Penal interest to be charged as applicable to individual banks.
The loan to be sanctioned as per delegation of powers preferably by the Branch nearest to the place of residence of parents.
No application for educational loan received should be rejected without the concurrence of the next higher authority. The loan to be disbursed in stages as per the requirement/ demand directly to the Institutions/ Vendors of books/ equipments/ instruments to the extent possible.
The loan to be repaid in 5-7 years after commencement of repayment. If the student is not able to complete the course within the scheduled time, extension of time for completion of course may be permitted for a maximum period of 2 years If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course.
The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Installments (EMI) fixed.
1% interest concession may be provided for loanees if the interest is serviced during the study period when repayment holiday is specified for interest/ repayment under the scheme.
Some of the foreign universities require the students to submit a certificate from their bankers about the sponsors' solvency/ financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies.)
Banks which wish to support highly and exceptionally meritorious/ deserving students without security may delegate such powers to a fairly higher level authority.b. Multiple Loans
In case of receipt of application for more than one loan for student borrower from a family, the 'family' as a unit has to be taken into account for considering the loan and security taken in relation to the total quantum of finance disbursed, subject to margin and repaying capacity of the parent/student.c. Minimum Age
There is no specific restriction with regard to the age of the student to be eligible for education loan.
d. Change of Address
In cases of student staying with parents and where such parents have transferable jobs or there is change in address, the bank may provide in the system of noting the "address for correspondence" for tracking purpose.
e. Top up loans
Banks may consider top up loans to students pursuing further studies within the overall eligibility limit, with appropriate re-schedulement, subject to taking required security.
The co-obligator should be parent(s)/guardian of the student borrower. In case of married person, co-obligator can be either spouse or the parent(s)/parents-in-law.
No Due Certificate
No due certificate need not be insisted upon as a pre-condition for considering educational loan. However, banks may obtain a declaration/ an affidavit confirming that no loans are availed from other banks.
Disposal of Applications
Loan applications have to be disposed of within a period of 15 days to 1 month, but not exceeding the time norms stipulated for disposing of loan applications under priority sector lending.
Flexibility in terms
In order to bring flexibility in terms like eligibility, margin, security norms, banks may consider relaxation in the norms on a case-to-case basis delegating the powers to a fairly higher level authority.
For further clarifications/ details, please visit IBA website.
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