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EDUCATION LOANS
MANAGEMENT SYSTEM
T Deepika
G Keerthana
V Keerthana
P Sugandhini
G Nikitha

Why education loan ?
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High cost of quality education
Reduced subsidy / financial support from
Government
Student should continue and pursue education
without break
No deserving student be denied opportunity to
pursue higher education for want of financial
support.
Loans for education is to 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
Human capital is national priority

OBJECTIVES OF EDUCATION
LOAN SCHEME OF BANKS
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Aim is to provide financial support from the
banking system
Deserving/ meritorious students to get loans
for pursuing higher education in India and
abroad
Affordable terms and conditions
No deserving student is denied an
opportunity to pursue higher education for
want of financial support

APPLICABILITY OF THE
EDUCATION LOAN SCHEME
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Applicable to all Commercial Banks operating
in India.
Applicable to all Private Sector and Public
Sector
RBI (Reserve Bank of India) and IBA (Indian
Banks Association) have issued broad
guidelines to banks
The implementing bank will have the
discretion to make changes suiting to the
convenience of the students/ parents to make
it more customer friendly.

STUDENT ELIGIBILITY
CRITERIA
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Should be an Indian National
Should have secured admission to
professional / technical courses in India
or Abroad through Entrance Test / Merit
Based Selection process

Courses eligible
- Studies in India (Indicative list)
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Graduation courses : BA, B.Com., B.Sc., etc., Post Graduation courses, 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

Courses Eligible - Studies
abroad
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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.

Expenses considered for
Education Loan
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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.

QUANTUM OF FINANCE &
MARGIN
 Quantum
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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
 Margin
 Upto Rs 4 lacs – Nil
 Above Rs. 4 lacs
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Studies in India5%
Studies Abroad15%
 -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.

SECURITY
 Upto Rs 4 lacs
 No security. Co-obligation of parents is a must (Parent to be joint
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borrower)
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
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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

Additional Conditions
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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
 Upto Rs 4 lacs – BPLR
 Above Rs. 4 lacs - BPLR + 1%
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Simple interest to be charged during the
Repayment holiday/ Moratorium period
For defaults penal interest to be charged as
applicable to individual banks

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 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
 In exceptional cases disbursements can be on reimbursement basis to
the student / parents – provided actual proof for payment of feews /
expenses vouchers are produced.

REPAYMENT
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The loan to be repaid in 5-7 years after
commencement of repayment.
Repayment holiday / Moratorium Course
period + 1 year or 6 months after getting
job, whichever is earlier.

What if the student is not able
to complete course in time?
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Extension of time for completion of course
may be permitted for a maximum period of 2
(TWO) years.
If the student is not able to complete the
course for reasons beyond his control, Bank
authority may at his discretion consider such
extensions as may be deemed necessary to
complete the course.

Servicing of Interest and
Concession
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Banks may insist for servicing of interest during
the study period
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 allowed by Banks
for loanees if the interest is serviced during the
study period when repayment holiday is specified
for interest/ repayment under the scheme.

INSURANCE
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Banks may arrange for life insurance
policy on the students availing
Educational Loan.
Individual Banks may work out the
modalities with insurance companies
Insurance cover amount not to exceed
total loan amount

FOLLOW UP / TRACKING
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Banks to contact college / university authorities to
send the mark sheet / progress report to the bank
at regular intervals
Bank can defer / refuse to disburse installments if
mark sheets / progress report is not produced
In case of studies abroad, bank may obtain the
Unique Identification Number (UIN)/Identity Card
and note the same in the bank's records

PROCESSING CHARGES
 No processing / upfront charges for
educational loans for studies in India

CAPABILITY CERTIFICATE
 Banks can also issue the capability certificate
for students going abroad for higher studies.
For this purpose 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.)

OTHER CONDITIONS
 Meritorious Students
Banks can support highly and exceptionally meritorious/
deserving students without security
 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.
 Minimum Age - There is no specific restriction with regard
to the age of the student to be eligible for education loan

OTHER CONDITIONS
(Contd..)
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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 is to be informed and
provided with the ‘address for correspondence' for tracking
purpose.
Top up loans - Banks can grant top up loans to students
pursuing further studies within the overall eligibility limit,
with appropriate re-schedulement, subject to taking
required security.
Co-obligator - 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 .

OTHER CONDITIONS
(Contd..)
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No Due Certificate - No due certificate from other bvanks
need not be insisted upon as a pre-condition for considering
educational loan. However, bank may insist for a
declaration/ an affidavit confirming that no loans are
availed from other banks.
Disposal Application – Education Loan applications have
to be disposed of by Banks 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, bank may consider
relaxation in the norms on a case-to-case basis delegating
the powers to a fairly higher level authority.

Where to get Education Loan
Application Form and how to apply ?
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Application can be filed Online in on all
the Bank websites
Or can be downloaded and hard copy
can filed with concerned Bank Manager
Education Loan Application forms are
available with all the Bank Branches

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