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Wednesday, November 10, 2010

All about education loan - A TV interview

K. Srinivasan, Convenor of Education Loan Task Force  (ELTF)was interviewed live in Jaya TV, a popular Tamil Channel on the various aspects of education loan and the procedures.
This was a live phone-in programme.  Many viewers sought clarifications over phone.  Eduction loan procedures, interest subsidy scheme, education loan for foreign studies and many more relevant informations were  discussed.
Please click 'play' to watch the video. (25 minutes).  The streaming of this video will be smooth in broadband connections.  If you find any difficulty, you may right click this link and download the video to your desktop in wmv format and play.

The video may also be watched from

Friday, October 15, 2010

Central Scheme to provide Interest Subsidy (CSIS) - Education Loan

 Central Scheme to provide Interest Subsidy (CSIS) for the period of moratorium of educational loans taken by students from economically weaker sections (EWS) under educational loan scheme of Indian Banks Association (IBA), to pursue Technical/ Professional education studies in India.
Government of India, Ministry of Human Resources Development, Department of Higher Education, New Delhi has launched a scheme under the name “Central Scheme to provide Interest Subsidy (CSIS)” for the moratorium period of educational loans availed by students from EWS under IBA educational loan scheme, to pursue Technical/ Professional courses in India. The scheme is effective from the academic year 2009-10.
Some of the salient features of the scheme are given below:


Objective of the Scheme

The Governemt of India has approved a scheme to provide full interest subsidy during the period of moratorium i.e. Course Period plus one year or six months after getting job, whichever is earlier, on  loans taken by students belonging to Economically Weaker Sections from scheduled banks under the Educational Loan scheme of the Indian Banks’Association, for pursuing any of the approved courses of studies in technical and professional streams, from recognised institutions in India.

Applicability of the Scheme

The Scheme would be applicable only for studies recognised Technical/Professional Courses in India. The interest subsidy shall be linked with the existing Educational Loan Scheme of IBA and restricted to students enrolled in recognised Technical/Professional Courses (after Class XII) in India in Educational Institutions established by Acts of Parliament, other Institutions recognised by the concerned Statutory Bodies, Indian

Institutes of Management (IIMS) and other institutions set up by the Central/State Government.

Interest Rates

The interest rates charged on the educational loan shall be as per the BPLR/Base Rate of the Individual Banks.

Moratorium Period

Under the scheme, the interest payable by the student belonging to EWS for availing of the Educational Loan for Technical/Professional Courses in India for the period of moratorium i.e. Course Period plus one year or six months after getting job, whichever is earlier. After the period of moratorium is over, the interest on the outstanding loan amount shall be paid by the student, in accordance with the provisions of the existing Educational Loan Scheme of Banks and as may be amended from time to time, whichever is earlier.

Income Limit/Proof

The benefits of the Scheme would be applicable to those students belonging to economically weaker sections(EWS), with an annual gross parental/family income upper limit of Rs.4.50 lakhs per year (from all sources). The scheme is intended to cater to the needs of students belonging to EWS with prescribed upper parental gross income limit of the family from all sources, which is based on economic index and not on social background. The scheme is independent of any other schemes which may cater to Economically Weaker Sections.

Competent Authority
The Ministry of HRD, Government of India shall issue an Advisory to all the State Governments requesting them to designate appropriate authority or authorities who are competent to issue income certificates, based on economic index and not social background, for the purpose of this scheme.

The Banks shall implement the Scheme based on the notification of the certification authority by State Governments communicated through District Level Consultative Committees (DLCCs).

Eligibility for Interest Subsidy

The interest subsidy under the Scheme shall be available to the eligible students only once, either for the first undergraduate degree course or the post graduate degrees/diplomas in India.

Interest Subsidy shall, however, be admissable for integrated courses (graduate+post graduate).

Interest subsidy shall not be available for the following student borrowers,

Those students once they discontinue the course midstream, or who are expelled from the Institutions on disciplinary or academic grounds.

However, the interest subsidy will be available only if the discontinuation was due to medical grounds for which necessay documentation to the satisfaction of the Head of educational institution will have to be given.

Nodal Bank

The Scheme shall be implemented through Canara Bank, which is the Nodal Bank for the scheme. However, the student can apply under the scheme only through branch where educational loan is availed.

Applicable Academic Year

The Scheme shall be applicable from the academic year 2009-10 starting 1stApril, 2009. The loan amount taken starting from the Academic Year 2009-10 (irrespective of the date of sanction) shall only be covered under the scheme of interest subsidy. Interest on any amount disbursed for courses starting before the academic year 2009-10 would not be considered for subsidy.

List of Technical/Professional courses

Students enrolled in recognised Technical/Professional Courses (after Class XII) in India in Educational Institutions established by Acts of Parliament, other Institutions recognised by UGC/AICTE and other Statutory Bodies, Indian Institutes of Management (IIMS) and other institutions set up by the Central/State Government.

Indicative List of Eligible Courses

Under Graduate Courses and Post Graduate Courses in Engineering (B.E/ M.E, B.Tech/M.Tech,B.Arch/ M.Arch etc.) Medical/ Para Medical (MBBS/MD, B.SC/ M.Sc.Nursing, B.Pharmacy/M.Pharmacy, BPT/MPT, BOI/MOI,Siddha, Ayurveda, Homeopathy,Naturopathy etc.)  Agriculture, Veterinary, Law, Dental (BDS/MDS), Management, Computer (MCA) etc.,

Post Graduate diploma courses duly approved by AICTE/UGC and conducted byrecognized institutions.

Friday, May 14, 2010

Interest subsidy scheme for education loan



Government of India
Ministry of Human Resource Development
Department of Higher Education

Central Scheme to provide Interest Subsidy for the period of moratorium on Educational Loans taken by students from economically weaker sections from scheduled banks under the Educational Loan Scheme of the Indian Banks’ Association to pursue technical/professional education studies in India. One of the major concerns of the Government is to ensure that nobody is denied professional education because he or she is poor. The Indian Banks’ Association (IBA) had formulated a comprehensive model educational loan scheme for adoption by all Banks, aimed at providing financial support from the banking system to deserving/meritorious students for pursuing higher education in India and abroad. Government of India has now approved a Scheme to provide full interest subsidy during the period of moratorium on loans taken by students belonging to economically weaker sections from scheduled banks under the Educational Loan Scheme of the Indian Banks’ Association, for pursuing any of the approved courses of studies in technical and professional streams, from recognized institutions in India.

2. The broad parameters of the Scheme are :-

(i) The Scheme would be only applicable for studies in technical and professional courses in India. The interest subsidy shall be linked with the existing Educational Loan Scheme of IBA and restricted to students enrolled in recognized professional courses (after Class XII) in India in Educational Institutions established by Acts of Parliament, other Institutions recognized by the concerned Statutory Bodies, Indian Institutes of Management (IIMs) and other institutions set up by the Central Government.

(ii) Under the Scheme, interest payable by the student availing of the Educational Loan Scheme of the Indian Banks’ Association for professional courses for the period of moratorium (i.e., course period, plus one year or six months after getting job, whichever is earlier) as prescribed under the Educational Loan Scheme of the Indian Banks’ Association, shall be borne by the Government. After the period of moratorium is over, the interest on the outstanding loan amount shall be paid by the student, in accordance with the provisions of the existing Educational Loan Scheme and as may be amended from time to time.

* (iii) The benefits under the Scheme would be applicable to those students belonging to economically weaker sections, with an annual parental income upper limit of Rs. 4.5 lakh per year.

(iv) The interest subsidy under the Scheme shall be available to the eligible students only once, either for the first undergraduate degree course or the post graduate degrees/diplomas. Interest subsidy shall, however, be admissible for combined undergraduate and post graduate courses.

(v) Interest subsidy under this scheme shall not be available for those students who either discontinue the course midstream, or for those who are expelled from the Institutions on disciplinary or academic grounds. However, the interest subsidy will be available for the actual period of study, only if the discontinuation was due to medical grounds for which necessary documentation to the satisfaction of the Head of educational institution will have to be given.
 
(vi) There would be a tag/marker on the degree of the student indicating his repayment liabilities.
 
(vii) The National Minorities Development & Finance Corporation (NMDFC) has an Educational Loan Scheme for individual beneficiaries, which is implemented through State Channelizing Agencies (SCAs). The National Safai Karamcharis Finance and Development Corporation under the Ministry of Social Justice and Empowerment also provides educational loan to the students of the target group for higher education. Interest on Educational Loan provided under these two schemes, if the loans are for pursuing professional courses after XII class, shall also be subsidized for the period of moratorium as per the terms and conditions of this Scheme.
 
(viii) The Scheme shall be implemented through Canara Bank, which is the nodal bank for the Ministry of Human Resource Development. Modalities for implementation and monitoring mechanism shall be finalized in consultation with the Canara Bank.
 
(ix) The Scheme shall be applicable from the academic year 2009-10.

(x) A list of professional courses for which the scheme shall be applicable,  shall be brought out, in consultation with the concerned Ministries/Departments and the Indian Banks’ Association, and publicised from time to time.

** (xi) A monitoring mechanism shall be evolved to monitor the benefits accruing to different categories of loanees, such as, the Scheduled Castes, Scheduled Tribes, Minorities, Disabled etc.

* Income proof shall be required from the students from such public authorities as are authorised by the State Governments for certification of income status for various purposes, including Central and State Sector Schemes.

** For better statistical reference and collation of data, information pertaining to beneficiaries shall be maintained in respect of the categories to which they belong, namely, Scheduled Castes, Scheduled Tribes, Minorities, Other Backward Classes, and Others; alongwith sub-classification in terms of gender, differently-abled/ persons with disabilities as well as the disciplines/programmes of study, year of enrolment and programmes as also the specialisation of study, institutions, locations, State-wise and Bank-wise.

Banks can't deny loan to management quota students - High Court

http://timesofindia.indiatimes.com/India/HC-Banks-cant-deny-loan-to-management-quota-students/articleshow/5928715.cms

HC: Banks can't deny loan to management quota students

Banks must extend educational loans to engineering students admitted under management quota also, the Madras High Court has ruled.

"Once the eligibility for admission is established and a candidate is selected through any one of the mode of selection permitted by the monitoring committee, it is not open to the bank to refuse loan facility to a deserving candidate," Justice N Paul Vasanthakumar said, passing orders on a petition filed by a student.

The student, S Saran Kumar, said in his petition that the Puducherry branch of the Karur Vysya Bank rejected his loan application on the ground that he had got admission under the management quota and not through the single window selection. Saran Kumar had got admission in the MRK Institute of Technology, a self-financing institution at Kattumannarkoil, for BE in electronics and communication in 2008-09.

After paying the first semester fee from his own pocket, the student approached the bank for an educational loan of Rs 3.4 lakh. Slamming the bank's rejection order, the student contended that the RBI-framed scheme for sanction of loan did not bar loans to students admitted under management quota. The eligibility criteria for the Loan Scheme were the nationality of the student, admission mode, quantum of payment,
he said.

Friday, March 26, 2010

How to complain against the Branch, if injustice is done?

ELTF has been getting lot of mails as to how public can complain when they do not get justice from the branches of banks.   Normally, we come across the following types of complaints:
General complaints against banks
1.  When highly deserving and poor students / parents approach the banks, the branch officials do not guide them properly; they are asked to come several times and whenever they come, they are asked to bring new documents.  Branches do not demand required documents in a single time.
2.  As per IBA guidelines, branches should not demand collateral security, margin and third party guarantee for loans less than 4 lakhs.  But many branches demand securities even for loans upto 4 lakhs.
3.  When the loan is disbursed, interest will be calculated on a simple basis and will be added to the principal amount, after the student completes the studies.  Principal and interest will be added and repayment will be fixed by the banks. The students, if they are poor, they can pay the interest after they complete the studies.  Payment of monthly interest is only optional and not compulsory and  can be deferred till the completion of studies.  Many branches insist on payment of monthly interest from the students, who cannot afford to pay.  They have to resort to outside borrowing to pay monthly interest.  In some cases, managers refuse to disburse further instalments of loans, if the students do not pay monthly interest.  Compelling to pay monthly interest is violation of IBA guidelines.
How to complain whenever the students face problems?
1.  If the students find that the branches are violating the RBI/IBA guidelines, they can meet the branch manager and request him to follow the guidelines.  If required, the aggrieved students can seek guidance from ELTF through email for correct procedures. Students can give a letter  to the bank in writing and seek a reply in writing. 
2.  If the Managers do not accept your request or still  if  you feel that they violate the guidelines, you may meet the Regional manager of the bank and discuss with him.  All the branches will display prominently, the names of higher authorities and their contact numbers in their office.  
3.  If you are still not satisfied with the response of the Regional manager, you can take up with the Chairman of the concerned bank through email giving full details of your problems.  The email ids of all the bank chairmen are given below.
4.  If you are not satisfied with the bank's response and if you want to take up with Reserve Bank of India, you may also write a letter to The Chief General Manager, RPCD, Reserve Bank of India, Central Office Building, 10th Floor, Shahid Bhagat Sing Marg, Mumbai 400001 - Phone 022 22610261.
5.  You can also approach the judiciary for any grievance, through your advocate any time.  But when you approach courts, it may be time consuming and the banks will have a right to defer the decision, till the judgment is delivered.  
5.  Before making a complaint to higher authorities, please convince yousrelf that you have a strong case and you have not been given justice.  Please do not send complaint for the sake of sending complaints.  
Whenever the students need any clarification on the rules and procedures, they can send mail to ELTF action2020eltf@gmail.com and seek the guidance.
 
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E-Mail IDs of Public Sector Banks

Name of the Bank
CMD's E-mail Address
1
Allahabad Bank
2
Andhra Bank
3
Bank of Baroda
4
Bank of India
5
Bank of Maharashtra
6
Canara Bank
7
Central Bank of India
8
Corporation Bank
9
Dena Bank
10
IDBI Bank Limited
11
Indian Bank
12
Indian Overseas Bank
13
Oriental Bank of Commerce
14
Punjab and Sind Bank
15
Punjab National Bank
16
State Bank of India
17
Syndicate Bank
18
UCO Bank
19
Union Bank of India
20
United Bank of India
21
Vijaya Bank

Tuesday, March 16, 2010

Education Loans - How banks have performed?

The following table gives the information of the outstanding advances under education loan and the total bank credit as at last Friday of March 2009.  All the PSU Banks put together have given finance to 15.80 lakh students amounting to 26925 crores.  The total bank credit as at that day was 22.83 lakh crores. The education loan constitutes only 1.18 percent of their total bank credit.
Please look at the performance of individual banks in the following table.

Source : RBI website
DISTRIBUTION OF OUTSTANDING ADVANCES OF PUBLIC SECTOR BANKS TO EDUCATION LOAN
March 2009
(No. of Accounts in lakh and Amount in Rs. crore)
Bank Group / Bank As on the last reporting Friday of March
Education Loan
Total Bank credit
No.of Amount
Amount %
Accounts Outstanding
crores edu loan
(1) (2)
(5) (6)
A. State Bank Group 5.28 9469 747871.48 1.27
State Bank of India 3.14 6182
549296.81 1.13
State Bank of Bikaner and Jaipur 0.15 280
30088.10 0.93
State Bank of Hyderabad 0.46 836
43937.72 1.9
State Bank of Indore 0.10 165
21746.58 0.76
State Bank of Mysore 0.23 391
25869.88 1.51
State Bank of Patiala 0.21 245
43960.81 0.56
State Bank of Travancore 0.99 1370
32971.58 4.16






B. Nationalised Banks 10.52 17457 1535601.92 1.14
Allahabad Bank 0.30 638
59443.40 1.07
Andhra Bank 0.75 1391
44427.60 3.13
Bank of Baroda 0.60 1165
144844.87 0.8
Bank of India 0.75 1324
144731.56 0.91
Bank of Maharashtra 0.17 315
34817.28 0.9
Canara Bank 1.47 2301
139036.91 1.65
Central Bank of India 0.53 811
86740.27 0.93
Corporation Bank 0.32 664
48927.12 1.36
Dena Bank 0.13 241
29185.36 0.83
IDBI  Bank Ltd. 0.03 52
103915.07 0.05
Indian Bank 1.28 1591
51830.64 3.07
Indian Overseas Bank 0.78 1033
75809.54 1.36
Oriental Bank of commerce 0.36 770
69064.72 1.11
Punjab National Bank 0.93 1611
156098.45 1.03
Punjab & Sind Bank 0.06 179
24698.10 0.11
Syndicate Bank 0.81 1150
82495.04 1.39
Union Bank of India 0.53 957
69669.05 1.37
United Bank of India 0.20 344
98264.85 0.35
UCO Bank 0.28 490
35727.45 1.37
Vijaya bank 0.24 431
35874.63 1.2
Public Sector Banks (A+B) 15.80 26925 2283473.40 1.18
Note : Data are provisional.

Source :RBI

Monday, March 15, 2010

ELTF initiative - Special Mention in Rajya Sabha about Education Loan under Rule 180A

 
dear friends
Members are aware that under India Vision group, we have formed Education Loan Task Force (ELTF) to create awareness about education loan procedures among highly deserving poor students.  We have also been taking up the cases, where such poor students are harassed ny the banks,  with concerned Chairman and RBI.
Mr T K Rangarajan, Member of Parliament (Rajya Sabha representing CPI M) has been supporting our initiative since the beginning.  Today he made a 'Special Mention' in the Rajya Sabha about the Education Loan under Rule 180A.  Under this rule, matters of serious public importance can be brought to the notice of the Government as "Special Mention".  This will be taken up on priority basis by the Government and concerned Minister (in this case Finance Minister) will be giving his reply personally to Rajya Sabha shortly.
I spoke to Mr Rangarajan over phone (he is now in Delhi)  and thanked him on behalf of ELTF.  He said after he made the mention in the Rajya Sabha about this issue, few MPs cutting across party line, came to his seat and congratulated him and offered their support for this issue.  I am confident that due to the mention in Rajya Sabha, and the support of passionate MPs, this issue will gain more importance.  Mr Rangarajan said that he would also personally discuss this issue with Hon'ble Finance Minister.
On behalf of ELTF and Action 2020 Team of India Vision Group, we place on record our deep appreciation to Mr T K Rangarajan MP and other Parliamentarians, who offered to extend support to our initiative.
Please read the 'Special Mention' made by Mr Rangarajan MP in Rajya Sabha today (15th March 2010).
TEXT OF THE SPECIAL MENTION UNDER RULE 180A MADE IN RAJYA SABHA ON MARCH 15, 2010
Quote
This century is considered as education century and education loan is an important one for the future development of India.  The students from very poor families who score high marks find very difficult to pursue higher education due to their poverty.  There is no uniformity of rules in sanctioning Education Loan by nationalised banks and the applicants have to undergo lot of hurdles.  Though RBI and IBA have given guidelines, many banks demand collateral security, guarantee even for the loan less than Rs.4 lakhs, insist on payment of monthly interest, insist on margin money ; charge higher rate of interest, etc.  Many brilliant poor students either go in search of NGOs for support or resort to borrowing at higher rate of interest.  Many deserving students could not pursue higher education due to lack of finance.  Banks hesitate to give education loan to highly deserving, brilliant poor students.
Educating the students is an important task of any Government.  And imparting higher education is an investment  on human resources and hence the educational loan should be interest free.  It should also advise the nationalised banks to popularise the education loan schemes through exhibition and advertisements.  The Government should immediately instruct nationalised banks to improve the disbursement of education loans.
The Government  for encouraging the banks to lend without hesitation may think of introducing credit guarantee for such loans.  The government may also think of susidising part of the loan disbursed by the banks to the students. 
Unquote
K. Srinivasan
Prime Point
91766 50273


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