HULT INTERNATIONAL BUSINESS SCHOOL Education Loan Process In India. Gaurav Agarwal Associate Director of Enrollment - Masters
Agenda1. Process of Education loan according to RBI2. Which banks provides Education Loan in India to study abroad.3. How loan process works with National Banks.
1.0 Process of Education Loan by RBI 1.1 Objectives of the schemeThe Educational Loan Scheme aims at providing financial support from the bankingsystem to deserving/ meritorious students for pursuing higher education in India andabroad. The main emphasis is that every meritorious student though poor is providedwith an opportunity to pursue education with the financial support from the bankingsystem with affordable terms and conditions. No deserving student is denied anopportunity to pursue higher education for want of financial support.Course EligibleGraduation : 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.
1.2 Student Eligibility• The student should be an Indian National.• Should have secured admission to a higher education course in recognized institutions in India or Abroad through Entrance Test/ Merit Based Selection process after completion of HSC(10 plus 2 or equivalent).• Where there is no entrance test/merit based selection process and admission is purely based on the marks scored in qualifying examinations, the student should have scored minimum 60% marks in qualifying examination. (10% relaxation for SC/ST categories).• However, where entrance test or selection purely based on marks obtained in qualifying examination may not be the criterion for admission to some of the post graduate courses or research programs. In such cases Branch should take into consideration the employability and reputation of the institution concerned.
1.3 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 completion of the course.• Any other expense required to complete the course - like study tours, project work, thesis, etc.
1.4 Quantum of FinanceNeed based finance subject to repaying capacity of the parents/ students with marginStudies Abroad – 20 lacks/ 37000 USD MaximumMARGIN15% - 25% of Loan amount ( For 37000 USD = 9250 USD Margin)• 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.
1.5 SecurityCollateral security equal to 100% - 150% of the loan amount or guarantee of thirdperson known to bank for the loan amount.Note:-• The document should be executed by both the student and the parent/ guardian.• 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 to be hypothecated to the Bank.
1.6 Rate of Interest National Banks 12 -15 %• The interest to be debited quarterly/ half yearly on simple basis during the Repayment holiday/ Moratorium period.• Penalty interest @ 2% be charged for the overdue amount and overdue period.
1.7 Sanction/ Disbursement• 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.
1.8 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
1.9 Processing Charges• No processing/ upfront charges may be collected on educational loans.
1.10 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.
1.11 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.
2.0 Which banks provides education loan in India • Allahabad Bank • Andhra Bank • Bank of Baroda • Bank of India • Bank of Maharashtra • Canara Bank • Central Bank of India • Corporation Bank • Dena Bank • IDBI Bank • Indian Bank • Indian Overseas Bank • Oriental Bank of Commerce • Punjab & Sind Bank • Punjab National Bank • Syndicate Bank • UCO Bank • Union Bank of India • United Bank of India • Vijaya Bank
3.0 How loan process works with national banks Step 1 . Student download loan application form from bank official website Step 2. Student fill the complete loan application form and attach required documents listed below.(Sample printed) – Admission letter ( A few banks may demand an i20 at the outset) – Scholarship letter – GMAT score (If have) – Program Brochure – Total expense sheet or official invoice – Three years income tax return of student/guarantor – 12 months bank statement of student and guarantor – Collateral Security documents copy – Pan-card copy – Passport copy
3.0 How loan process works with national banksStep 3. Student approaches national bank with supporting ` documentationsStep 4. Bank Processes the documents – Bank Manager will check the application and documents before forwarding it to branch office/circle office. (1 week) – Branch office will check the documents, and will forward the collateral security papers to property valuation agency and lawyer to check all legal documents .(2 week)Step 5. Once the all documents approved and students meets the necessary criteria , Branch office will ask Bank manager to approve the loan and issue sanction letter to the student. (1week)Step 6. Loan agreement signed with student by the bank.Step 7. Apply for i20 and get visa approvedStep 8. Ask the bank to wire transfer tuition fees.