02. After submission of applications, is there any time limit for the banks to process and communicate decision?
The students are entitled to receive acknowledgement from the banks after submission of applications. The acknowledgement should contain date and time of receipt of the application and the signature of any authorised official of the bank. The banks should process the application and communicate the sanction or refusal within 15 to 30 days. The refusal has to be approved by higher authority of the bank. The students are entitled to get a letter stating the reasons for refusal.
03. Some banks mention as IBA Scheme and Non-IBA Scheme. What is the difference?
In consultation with the Government of India, Indian Banks Association (IBA) has forumulated a scheme for granting education loan to students. All the Public Sector Banks have accepted this Scheme suggested by IBA. The latest IBA scheme is available in this link.
http://www.eltf.in/2012/10/education-loan-iba-scheme-effective.html
If the students are not eligible under IBA scheme, depending on individual cases, banks come forwrd to help the students with education loan under their own terms and conditions. Even most of the private banks have not been following the IBA scheme. They also grant under their own terms. These loans are known as Non IBA scheme. The security concessions, interest subsidy, long repayment schedules may not be available under Non IBA Scheme.
04. Can the students joining the colleges through Management quota, avail the education loan from banks?
Prior to Sep 2012, the banks were not granting education loans to the students joining under Management quota. From Sep 2012, IBA included a note in the scheme as follows:
When the student applies under merit channel and gets an allotment of seat or college, he can refuse the allotment on the grounds of (a) not getting the course which he wanted or (b) not getting the college which he opted. If he refuses the allotment and then joins the course of his choice under Management quota, he is eligible for loan under IBA scheme.
Instead if the student directly joins the management quota, then banks will not consider granting education loan under IBA scheme.
5. Who is eligible for interest subsidy?
The students availing education loans from banks are eligible for interest subsidy on the following conditions:
(a) The loan should have been sanctioned under IBA scheme;
(b) The student should be pursuing professional / technical courses (after Plus two) in India;
(d) The loan amount or part of the loan amount sanctioned on or after 1.4.2009 is eligible for interest subsidy.
If the students are eligible for interest subsidy and if they submit the income certificate to the bank, then the students can get 100% interest subsidy till the moratorium period (One year after completion of study or six months after getting employment, whichever is earlier). The banks should not collect interest from the students till the end of moratorium period. The banks will claim from the Government. If any bank insists on the students to pay interest periodically as pre-condition to release the next instalment of fees, it is a violation of Government guidelines. The students can refuse to make interest payment and can complain to the Chairman of the Bank and to RBI.
Even if the students are not eligible for interest subsidy, the students can opt to pay accrued interest later. In such cases, the banks will calculate interest and add the accrued interest along with principal and fix up EMI. The students can submit a letter to the Bank Manager to this effect. Bank cannot refuse to accept the request.
If a loan amount of Rs.2,00,000 was sanctioned in 2008 to be disbursed @Rs.50,000/- each year and Rs.1,50,000/- was disbursed in 3 years after 1.4.2009, then this amount of Rs.1.50 lakh is also eligible for interest subsidy. The students can give a letter to the banks seeking interest subsidy.
Interest subsidy is available only for one course either UG or PG. More than one person from the same family can avail interest subsidy.
These rules apply only to loans sanctioned under IBA scheme.
More than one person can avail the education loan from the same family (same parents). In that case, the limits will be combined and the security norms will be applicable accordingly. If they avail loan under education loan under IBA scheme, all the brothers / sisters are also eligible for interest subsidy, subject to other conditions.
07. Some banks refuse to accept applications, if the marks are less than 60%. is it right?
This is wrong. As long as the student got admitted under merit channel, irrespective of the marks, they are eligible for education loan under IBA scheme. Please also see the High Court Judgement posted in this site.
08. If we have grievance, how to take it forward?
If the students have any grievance for violation of guidelines, harassment, etc., they can meet the concerned Regional Manager of the bank and submit a complaint. They can also submit a complaint to the Chairman of the concerned bank and also to RBI. Details are given in this site.
09. If the students want to avail education loan for foreign studies, what should we do?
The repayment starts one year after completion of study or six months after getting employment, whichever is earlier. If the student is eligible for interest subsidy, banks will get the reimbursement from the Government. Banks will start applying interest after moratorium period.
If the student is not eligible for interest subsidy, the accrued interest will be added to the Principal amount after the moratorium period.
After the moratorium period, bank will fix EMI repayable within a maximum period of 10 years of 15 years, depending on the amount. Students can opt for 'telescopic' repayment schedule. That means, depending on the income, students can pay lower EMI in the initial period and higher EMI later. Students should insist on a longer repayment period, so that the loan does not become Non Performing Asset.
11. How to approach ELTF?
If any guidance is needed on the issues, which are not discussed in this site, you can write to us at info@eltf.in with full details. We do not entertain 'tweet' type of messages. We do not entertain any phone calls.
Before taking up the grievances with ELTF, students are advised to meet the branch manager and the regional manager for sorting out the grievances.