Now, Rs 7.5 lakh education loan without surety

www.mangaloretoday.com

New Delhi: Sep 17, 2015: Students will soon be able to get loan upto Rs 7.5 lakh from banks for higher education without any guarantor or surety with the Centre gearing up to roll out a much-awaited scheme.

The rate of interest against the amount of education loan to be sanctioned under the scheme would also not be more than 2 percent of the base rate, official sources told Deccan Herald. The students will be given a window of 20 years for repayment of the loan. They will have to start the repayment of the loan amount one year from the date of completion of their programme or getting a job, the sources said.

At present, students are required to start repayment of education loan six months from the date of getting a job or one year from the date of completion of their programme, whichever is earlier, with rate of interest varying from one bank to another. For education loan of Rs 4 lakh to Rs 7.5 lakh, students are also required to bring a guarantor.

“Department of financial services has finalised the modalities of the credit guarantee fund scheme for educational loans. It will soon be rolled out,” sources added.

The scheme was announced by the erstwhile United Progressive Alliance (UPA) government in 2012.

Under the scheme, the Centre will become the guarantor of the students seeking loans for higher education.  For this, the government will set up a fund to provide surety to the banks for the amount of loan to be sanctioned by them to students.

The credit guarantee fund, which will have a corpus of Rs.3,500 crore for a period of five years, will become operational with Rs.500 crore in the first fiscal with the announcement of the scheme.

The Human Resource Development (HRD) Ministry will make provisions for the credit guarantee fund from its budget resources. The fund will be augmented by Rs100 crore each year for guaranteeing the education loans.

All the nationalised banks will be part of the scheme. Many of the Many of the private sector banks and other members of the Indian Banks’ Association are expected to become part of the scheme.

Under the scheme, the government will guarantee 75 per cent of the amount of loan to be sanctioned by the banks’ and settle the claims accordingly in case of non-repayment of loan amounts by the students.

The banks will, however, have to pay 0.5 per cent of the loan total outstanding amount to the credit guarantee fund authority, to be set up under the scheme to deal with all the transaction on behalf of the government.