Wednesday, September 2, 2015

Clarifications on Education Loan Interest Subsidy Scheme (CSIS)

ELTF has been getting lot of enquirers from different part of country seeking clarifications on 'Interest Subsidy Scheme'.  

There are two types of Interest Subsidy scheme for students pursuing education in India.  

1. First Scheme:  For Loans granted / disbursed on or after 1st April 2009; 
2. Second Scheme:  For Loans granted / disbursed prior to 1st April 2009;

For both the Schemes, the eligibility is as follows: 

a)   The Education Loan should have been sanctioned under IBA Scheme;
b)  The Loan should have been granted to pursue professional or technical courses in approved Institutions after 12th std. (Diploma students joining Engineering Courses through lateral entry are also eligible);
c)    The education should be within India;
d)   The gross parental income should be less than 4.50 lakhs.

For Loans granted prior to 1.4.2009

In Feb 2014, Shri P Chidambaram (then Finance Minister)  announced in the Parliament that Government would reimburse 100% of the interest outstanding as on 31.12.2013.  Canara Bank was appointed as Nodal Bank to pool the data.  Interest component on all eligible  loans outstanding as on 31.12.2013 were paid by the Government to the Banks and credited to the loan accounts.

In this scheme, the students who availed loan prior to 1.4.2009 and who paid the interest regularly, were in a disadvantageous position.  Since interest component was either nil or negligible, they did not get any benefit of the interest subsidy.  Similarly the students who closed the education loan account before 31.12.2013 were also not eligible to get interest subsidy.

Now this scheme is closed.  Now the students cannot claim any interest subsidy under this scheme.  We are writing this only for information.

For Loans granted / disbursed on or after 1.4.2009

Government of India (Ministry of HRD) provides 100% interest subsidy for the eligible students (as given earlier) for all the loans disbursed on or after 1.4.2009 during the moratorium period.  

If a loan has been sanctioned in 2007 for Rs.4 lakhs, to be disbursed @ Rs. 1 lakh every year,  the student is eligible for interest subsidy for the disbursements made in 2009 (if it is after 1.4.2009) and 2010.

Moratorium period is the study period + one year of six months after getting employment whichever is earlier. 

Interest subsidy is available for either Under Graduation or Post Graduation.  From the same family, brothers and sisters can avail the subsidy individually.  

Students can avail the subsidy under only one scheme.  Students who availed subsidy under the second scheme (loans prior to 1.4.2009) are not eligible for subsidy under the first scheme. 

Please go through the guidelines in this links very carefully.

Problems faced by students

The students were required to submit the Income Certificate to the Bank to claim interest subsidy.  Since the Banks did not intimate many of the students in the early years, many eligible students did not get interest subsidy.

It is the duty of the Banks to identify the eligible students and advise them to get the income certificate.  Also, it is the duty of the Bank to submit the claim through the Nodal Bank portal to the Government of India within the time stipulated by the Government.  Due to the fault of many of the Branches, claims were not submitted in the past claiming interest subsidy by the Banks.

Even the students who got subsidy, received only a small portion of the interest debited by the Bank.  In many cases, Banks failed to submit the claim for few years.  For example, banks might not have claimed for 2009-10, but claimed for other years.  Also, they might have claimed for 2009-10, 2010-11, but might not have claimed for other eligible years during the moratorium period.

ELTF has been taking up this issue through supporting MPs in the Parliament and with the Government for the past three years.  

The eligible students can check the status of their interest subsidy through this link 

(Some students may get 'Data not available' message.  In that case, the students have to approach only the Bank manager for details. It is the responsibility of the Bank Managers to provide the claim related details to the students.)

Government of India opens the portal as one time measure

In order to resolve the confusion of the past disbursement of Interest Subsidy, the Government of India (MHRD) has now permitted  the Nodal Bank Canara Bank to open their portal to enable the Banks to file the claim.  

Accordingly, all the pending claims, unclaimed interest subsidy for the period from 2009-10 to 2013-14 can now be claimed by the Banks.  Though the portal was supposed to have been opened on 1st Sep 2015, due to some technical reasons, it is likely to be opened next week.  Please keep watching this site and our Facebook page for latest updates.

(Update:  The Portal is opned on 7th Sep 2015 and will remain open till 10th October 2015)

What students can do

If you have any education loan disbursement on or after 1.4.2009  (irrespective of your date of sanction say 2008 or 2007) and if you are eligible for interest subsidy as given in the early paras, then check your statement of account and also through the link given above for the subsidy claimed by the Bank.

Please compare the actual interest debited by the Bank during that Financial Year with the interest credited or not credited.  If the students find that either interest subsidy for that year has not been claimed or shortly credited, please write a letter giving the complete details and hand over to the Manager.  Please request the Manager to claim the interest subsidy, when the portal opens.  

If the students get a response from the Managers that they have not received any instructions from the Head Office, the students can send their request to the Chairman of the Bank, Regional Manaer and to the Branch under Registered Post. You can also mention that the Manager refused to accept the request.   You can request the Managers to claim the interest as and when the portal gets opened, after verifying the correctness.  

If required, the students can meet the Regional Manager and submit a letter personally.  Though it is the duty of the Bank Manager to identify and submit the claim, to avoid any future confusion, ELTF suggests that students themselves can verify and draw the attention of the Managers.

For the latest IBA guideline, please click

ELTF will not follow up individual cases.  If the students find any difficulty, they have to send complaint to Chairman of the Bank and to Reserve Bank of India.  Please do not write to ELTF for individual issues.  They can personally meet the Regional Managers and sort out the issues. 

This is an one time measure allowed by the Government.  Hence, students and banks should avail the opportunity so that all the pending cases are resolved.  
By K Srinivasan, Convenor, ELTF


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