Tuesday, January 2, 2018

How to handle when Banks did not claim interest subsidy on Education loans? - FAQ

ELTF has been receiving hundreds of mails from the students seeking our advice on the following two aspects.

1.  Banks have not claimed eligible subsidy from the Government within due date, thereby denying the interest subsidy to the students; and

2.  Though the Government of India has promised 100% interest subsidy during the study period plus one year for eligible students, the Government has not settled full amount.

To avoid repeating the same response, we want to give our views on the two major issues concerning the students.

Interest Subsidy Scheme

Government of India has introduced an Interest Subsidy Scheme since 2009, to provide 100% interest subsidy to the eligible students during the study period plus one year.  Since many banks did not submit the claim to the Nodal Bank, with the initiative of ELTF, the Government allowed 'one time opening' of the portal in 2015 to enable the Banks to submit the past claims as one time measure.  In spite of this permission, many banks failed to submit the pending claims in time.  Due to the negligence of banks, the eligible students have been denied their eligible interest subsidy. 

ELTF also receives complaints that the Managers have not been creating awareness about the interest subsidy and not advised the students to submit the income certificate.  It is the responsibility of the Bank to create awareness and file the claim for eligible students.  

In many other cases, though the Banks might have filed their claims in time, the Government has not settled 100% interest subsidy as promised by them.  Only around 25% of subsidy is reimbursed by the Government.  

ELTF has taken up these issues in Parliament through supporting MPs and also directly with Hon'ble Prime Minister.   

We have given full details about Interest Subsidy Scheme in the following links. We also give the links of other official sites for more information.

The eligible students may verify the status of their interest subsidy through the links given below.  

For enquiry regarding CSIS Subsidy claims made up to 2013-14:

For enquiry regarding  CSIS Subsidy claims made after 2013-14:

Students can claim damages and compensation

Now, no claim can be submitted upto FY 2016-17.   If the Banks have failed to submit the claims fully or partially or failed to inform the students about the subsidy procedures,  they can approach 'District Consumer Forum' and file a complaint against the Branch and the Managing Director of the Bank claiming damages and compensation.  This is a simple and cost effective legal process.  Students can visit District Consumer Forum personally and meet the officials and take guidance.  Or they can approach their advocate.

If the Government has not settled 100% subsidy, the students can file case against the Bank and Government of India in the High Court.

They can also file a complaint against the Bank with the Banking Ombudsman.

Details are given in this link to get legal remedies: 

Not withstanding the deficiency of services by Banks or Government, students can not stop the repayment of the loan.  As per IBA Scheme, repayment can be done in 180 months with telescopic repayment schedule.  The students are advised to follow the repayment schedule and seek legal remedy for the interest subsidy problems.  

- By K. Srinivasan, Convenor, ELTF


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