1. Objective of the scheme: The educational loan scheme outlined below aims at providing financial support from the banking system to deserving and / meritorious students for persuing higher education in India and abroad. The main emphasis is that every meritorious student though poor is provided with an opportunity to persue education with the financial support from the banking system with affordable terms and conditions. No deserving student is denied an opportunity to persue higher education for want of financial support.
2. Applicability of the Scheme: The scheme detailed below could be adopted by all commercial Banks. The scheme provides broad guidelines to the banks for operationalising the educational loan scheme and the implementing bank will have the discretion to make changes suiting to the conveninence of the students / to make it more customer friendly.
3. Eligibility Criteria :
Student Eligibility :
* Student should be an Indian National
* Secured admission to professional / technical courses in India or abroad through entrance Test / Merit Based Selection process.
Courses Eligible:
(a) Studies in India : ( Indicative List)
* Graduation courses : B.A. B.Com, B.Sc., etc.
* Post Graduation courses : Masters & Phd.
* Professional Courses: Engg. , Medical, Agriculture , Veterinary, Law ,Dental, Management , Computer etc.
* Computer certificate courses of reputed institutes accredited to Deptt. of *electronics or institutes affliated to university.
* Courses like ICWA , CA , CFA etc.
* Courses conducted by IIM, IIT, IISc , XLRI, NIFT, etc.
* 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 the future prospects/recognition by user institutions.
(b) Studies Abroad :
* Graduation For job oriented professional/technical courses offered by reputed universities.
* Post Graduation MCA,MBA,MS etc.
* Courses conducted CIMA-Londin, CPA in USA etc.
Expenses considered for Loan
* 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.
* Travel expenses/passage money for studies abroad.
* Purchase of computers-essential for the completion of the course.
* Any other expense required to complete the course- like study tours, project work, Thesis etc.
4. 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. 7.50 lacs
Studies abroad - Maximum Rs. 15.00 lacs.
5. MARGIN
Upto Rs. 4.00 lac : NIL
Above Rs. 4.00 lac : Studies in India : 5%
Studies Abroad : 15%
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.
6. SECURITY
Upto Rs. 4.00 lac : No Security
Above Rs. 4.00 lac & : Collateral in the form of a suitable third party
Upto Rs. 7.5 lac guarantee. The Bank may, at its discretion waive third party guarantee if satisfied with the net worth/means of parent who would be executing the documents as “joint borrower.”
Above Rs. 7.5 lac Collateral security of suitable value or suitable third party guarantee alongwith the assignment of future income of the student for payment of installments.
NOTE :
* 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,LIC Policy, gold, shares/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 II charge basis provided it covers the required loan amount.
* In case the loan is given for purchase of computer the same is to be hypothecated to the Bank.
Banks who wish to support highly meritorious/deserving students without security may delegate such powers to fairly higher level authority.
7. RATE OF INTEREST
Please click on For rate of interest
(a)The concession of 1% additional interest on account of service shall be governed by HO PS Circulatory letter No.67/2004 dt 15.12.2004 as already laid down under the scheme.
(b)Further, an additional benefit of 0.50% will be applicable to those borrowers (including staff) who offer additional collateral covering 100% of the loan amount.
Simple interest to be charged during the Repayment holiday/moratorium period Penal interest @ 2% be charged for above Rs. 4.00 lacs for the overdue amount and overdue period.
8. APPRAISAL/SANCTION/DISBURSEMENT
* In the normal course, while appraising the loan the future income prospects of the student will be looked into. However, where required, the means of parent/guardian could also be taken into account to evaluate re-payment capability
* The loan to be sanctioned as per delegation of powers preferably by the Branch nearest to the place of domicile.
* 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.
9. REPAYMENT
Repayment holiday/Moratorium : Course period + 1 year or 6 months after getting job, whichever is earlier
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 extension 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 Instalments (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.
10. FOLLOW UP
Banks to contact college/university authorities to send the progress report at regular intervals in respect of students who have availed loans.
11. PROCESSING CHARGES
No processing/upfront charges may be collected on educational loans.
12. CAPABILITY CERTIFICATE :
Banks can also issue the capability certificate for students going abroad for higher studies. For this financial and other supporting documents may be obtained from applicant, if required.
(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).
13. OTHER CONDITIONS :
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.
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.
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.
Other Details Visit : www.psbindia.com