Take a peek into other important points of consideration that the Comprehensive Educational Loans Scheme entails:
Procedures
The Government of India in consultation with Reserve Bank of India (RBI) and Indian Banker’s Association (IBA) has framed a Comprehensive Educational Loan Scheme. The scheme envisages a loan of up to INR 7.5 lac for studies in India and INR 15 lac for studies abroad. These are not stringent figures though. State Bank of India’s upper limit for such loans is INR 20 lac. and recently the India bank has upgraded its maximum permissible loan up to INR 15 lac for studies in India and INR 25 lac for studies abroad. So, the limits may vary with the change in the schemes and of course, time.
However, to avail a loan of any amount, satisfying the eligibility criteria of the bank is a prerequisite. You are eligible to obtain an educational loan from any Indian bank if:
You are an Indian national
You have secured admission to professional/ technical courses through entrance test/ selection process
You have secured admission to foreign university/ institution
Margin
Up to INR 4 lac, nil for both studies in India and abroadAbove INR 4 lac, 5 % for inland studies and 15 % for studiesSecurity
The Allahabad Bank has the following security/collateral security requirements for granting loans to students. However, the requirements differ from bank to bank| Loan up to INR 4 lac. | No collateral security. |
| Loan above INR 7.5 lac. | Security in the form of satisfactory third party guarantee. |
| (a)Collateral security of suitable value. (b)Co-obligation of parents/guardians/third party along with assignment of future income of the student for payment of installments |
Rate of interest
The rate of interest is 10.75 % up to INR 4 lac and it does not exceed the Prime Lending Rates (PLR). For a loan above INR 4 lac, the interest rate is 11.75 % and it will not exceed PLR plus 1 percent. However, the rate of interest is subject to changes as per the specifications of RBI or the concerned bank.Repayment holiday/Moratorium
Loans are repayable in 5 to 7 years. Repayment of both principal and interest will start after one year after completion of the course or six months after getting employment, whichever is earlier. Interest will be charged on simple basis during the period of study / moratorium period. At the commencement of repayment, the accrued interest is added to the principal amount and Equated Monthly Installments (EMI’s) fixed on total outstanding amount. After commencement of repayment, the benefit of simple interest would be discontinued.Processing Fee
Most of the Indian banks do not charge any processing fee or upfront charges. The State Bank of India accepts a deposit of INR 5000 for education loan for studies abroad, which is adjusted in the margin money.Credit Delivery
You can avail the loan from the branch nearest to the place of your permanent domicile.Disbursement
In the normal course, while appraising the loan, your future income prospect is looked into. However, where required, the means of your parent/guardian can also be taken into account to evaluate re-payment capability.
The loan is sanctioned as per delegation of powers preferably by the Branch nearest to the place of domicile. No application for educational loan received is rejected without the concurrence of the next higher authority.
The loan is disbursed in stages as per the requirement/demand directly to the Institutions/Vendors of books/equipment’s/instruments to the extent possible.
Follow up
The bank from which you have availed the loan can contact the college/university authorities to send your progress reports, at regular intervals.Capability Certificate
If you are going abroad to study, some of the foreign universities require you to submit a certificate from your bankers about the sponsors’ solvency/financial capability with a view to ensure that your sponsors are capable of meeting the expenses till completion of studies. Accordingly branches can also issue the capability certificate. For this financial and other supporting documents may be obtained from you, if required.Documents
You need to keep the following documents in place before applying for an educational loan:
Mark sheets of the last qualifying examination for school and graduate studies in India.
Proof of admission to the course.
Schedule of expenses for the course.
Copies of letter confirming scholarship
Copies of foreign exchange permit, if applicable.
Two passport size photographs.
Statement of bank account for the last six months of borrower.
Income tax assessment order not more than two years old.
Brief statement of assets and liabilities of borrower.
If you are not an existing bank customer you would need to establish your identity and give proof of residence.
Finally, you need to hit on the right bank with the right educational loan scheme to suit your needs. Parameters to weigh the alternatives are many; as in, whether the bank provides loan for the course you are opting for and if yes, then up to what extent, the margin and security requirements, the rate of interest, proximity of bank to your residence, et al. The discretion is yours after a through analysis. The hit-list of the banks that offer easy, quick and reliable loans is as under:
Allahabad Bank
Union Bank of India
Oriental Bank of Commerce
Punjab and Sind Bank
Indian Bank
Indian Overseas Bank (Vidhya Jothi Scheme)
Canara Bank (Vidyasagar Scheme)
State Bank of Mysore (Gananamitra Educational Loans)
Andhra Bank (Educational loans for Dr. Pattabhi Vidya Jyothi Scheme)
State Bank of Hyderabad
Bank of Punjab
Punjab National Bank (Vidyalakshypurti Scheme)
For further bank-specific information pertaining to their educational loan schemes, contact us.