MAIN

ADV.226/2015-16

SUB :

SL - 12

A
CO : Rural Banking Dept

DT.

FILE

08.03.2016
M-2

S - 202

Sub: Master Circular on Educational loan Schemes

-----Education is central to the human resources development and empowerment in any country. National and
State level policies are framed to ensure that this basic need of the population is met through appropriate
public and private sector initiatives. While government endeavour to provide primary education to all on
universal basis, public funding of higher education is not considered feasible. Cost of education has been
going up in recent times and since the student has to bear most of the cost, there is a clear case for
institutional funding in this area. Education loan scheme is an attempt to bring out a viable and
sustainable bank loan scheme to meet the aspirations of our society.
Presently our Bank offers Educational Loan under the following five schemes.
1. IBA Model Educational Loan Scheme
2. IB Educational Loan Prime
3. IB Educational Loan Prime NIT
4. Skill Loan Scheme
5. Non IBA scheme
With a view to facilitate the branches to have access to all the information on educational loan schemes,
a Master Circular incorporating the guidelines/directives in force, collated from various circulars issued
earlier on the subject is appended.
The Model educational Loan scheme evolved by Indian Banks Association (IBA) and communicated by
Reserve Bank of India vide letter dt.28.04.2001 has been implemented in our Bank with effect from
04.07.2001 with the approval of our Board. Subsequently, based on certain modifications in the Model
Educational Loan Scheme by IBA during May 2012 and September, 2012 revised guidelines were issued
vide our circulars Adv.48/2012-13 dated 17.07.2012 and Adv.78/2012-13 dated 09.10.2012. A Master
Circular on Educational Loan Schemes was issued vide ADV.88/2015-15 dt.11.09.2014.

The revised IBA Educational Loan scheme duly incorporating the modifications is enclosed as
Annexure-1.

Educational Loan Prime and IB Educational Loan Prime NIT as Annexure-2

Skill Loan Scheme as Annexure-3.

Other important guidelines/ clarifications from IBA are enclosed as Annexure-4.

The Non-IBA scheme has been dealt in detail and enclosed as Annexure-5.

Details on Vidya Lakshmi portal A common Web Portal for applying for educational loan as
Annexure - 6

Product codes for educational loan is enclosed as Annexure-7

Tracking of student borrowers/ Effective monitoring and follow up of educational loans-as Annexure-8

CSIS Scheme / Pado Pardesh / ACSISOBCEBC as Annexure-9 (i, ii, iii)

List of Important Circulars on Educational loan is enclosed as Annexure-10

Zonal Offices / Branches are requested to implement the different type of Educational Loan schemes as
detailed in this circular in letter and spirit, strictly adhering to the prescribed guidelines.

E SELVASEKARAN
DEPUTY GENERAL MANAGER (RBD&FI)

Annexure-1
Revised IBA Educational Loan Scheme -2011

1. ELIGIBILITY CRITERIA:
1.1. Student Eligibility:
Should be an Indian National
Should have secured admission to a higher education course in recognized institutions
in India or Abroad through Entrance Test/ Merit Based Selection process after
completion of HSC (10 plus 2 or equivalent). However, entrance test or selection purely
based on marks obtained in qualifying examination may not be the criterion for
admission to some of the post graduate courses or research programmes. In such
cases, applications of students who have secured not less than 60% marks or
equivalent grade may be considered taking into account employability and reputation of
the institution concerned.
1.2. Courses eligible:
(a) Studies in India: (Indicative list)
>Approved courses leading to graduate/ post graduate degree and PG diplomas
conducted by recognized colleges/ universities recognized by UGC/ Govt./ AICTE/
AIBMS/ICMR etc.
>Courses like ICWA, CA, CFA etc.
>Courses conducted by IIMs, IITs, IISc, XLRI. NIFT, NID etc.
>Regular Degree/ Diploma courses like Aeronautical, pilot training, shipping etc.,
approved by Director General of Civil Aviation/Shipping, if the course is pursued in
India.
>Approved courses offered in India by reputed foreign universities.
>Other job oriented courses leading to technical/ professional degrees, post graduate
degrees/ P.G. diplomas offered by recognized institutions.
> Regular Degree/Diploma courses in nursing approved by Indian Nursing Council
or any other regulatory body as the case may be, pursued in India.
Notes:
Admissions of students may be by either through counselling process arranged by
respective State Governments or direct admission through a Merit based selection
process conducted by the individual colleges/universities. If a student seeks
admission in a college/ university and passes through any type of selection process
he/she may be treated as meritorious student / coming under the purview of merit
quota and is therefore eligible for educational loan under IBA scheme.
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 Sanction of loans to applicants who got admission under Management Quota is to

be considered outside the purview of IBA educational loan scheme except where
students who originally secured admission through State Government Agency
conducted counselling and are not able to join the college/course due to the reasons
of non suitability of the course offered, but choose to get admission under
Management Quota for the desired course are eligible for educational loan under
IBA scheme. And in such cases student has to submit proof for having undergone
certain selection process for admission in a recognised institution for an approved
course, the application can be considered under IBA Scheme and minimum cut off
marks is not required.
Correspondence courses / off-campus courses and on-site/ partnership programmes
are not eligible for loan under the IBA scheme.
In case of Part-time courses, research work and job oriented specialized programs,
loan can be considered on merit and placement records of the institution, on a case
to case basis by the Zonal Level Credit Committee taking in to account the existing
income sources of the applicant, placement / job prospects after completion of the
course etc.
(b) Studies abroad:
Graduation: Job oriented professional/ Technical courses offered by reputed
universities.
Post graduation courses such as MCA, MBA, MS, etc.
Courses conducted by CIMA- London, CPA in USA etc
Degree/ diploma courses like aeronautical, pilot training, shipping etc provided
these are recognized by competent regulatory bodies in India/ abroad for the
purpose of employment in India/ abroad.
Notes : For Studies Abroad, the request for loan may be processed, based on
merits and adequate care to mitigate the inherent risks involved in the individual
case and due diligence are to be exercised. Regarding approval of the courses in
India for studies abroad, it can be ascertained from Association of Indian
Universities, New Delhi on payment of nominal fees.
1.3. Expenses considered for loan:
i. Fee payable to college/ school/ hostel*
ii. Examination/ Library/ Laboratory fee.
iii. Travel expenses/ passage money for studies abroad
iv. Insurance premium for student borrower, if applicable.
v. Caution deposit, Building fund/ refundable deposit supported by Institution bills/
receipts.**
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vi. Purchase of books/equipments/ instruments/ uniforms ***

vii. Purchase of computer at reasonable cost, if required for completion of the
course***
viii. Any other expenses required to complete the course like study tours, project
work, thesis, etc. ***
Notes:
*Reasonable lodging and boarding charges will be considered in case the student
chooses/is required to opt for outside accommodation. Since the fee structure has
not been stipulated for hostel and mess charges by Government/Govt. Approved
regulatory bodies, our Banks Board has accorded approval for Uniform Hostel and
Mess charges as below.
(Per annum)
Maximum Hostel and Mess Charges # (Areas where College/Hostel is located)
Major A Class Cities

Area I

Other Places

Upto Rs.60000/-

Upto Rs.50000/-

Upto Rs.40000/-

# Policy rates (maximum Hostel and mess charges as above) or Hostel and Mess
charges prescribed by the colleges whichever is less is eligible for consideration.
Classification of Cities as per 2001 census
Major A Class Cities :
Ahmedabad, Bangalore, Chennai, New Delhi, Hyderabad, Kolkata, Mumbai.
Area-I
Places with population of 12 lakhs and over viz., Agra, Bhopal, Coimbatore, Indore,
Jaipur, Kanpur, Kochi, Lucknow, Ludhina, Madurai, Nagpur, Patna, Pune, Surat,
Vadodara, Varanasi, Visakhapatnam.
Other Places :
All other places with population below 12 lakhs and not included above.
Flexibility in terms:
In order to bring flexibility in terms, in genuine and needy cases relaxation can be
considered on a case to-case basis as below:
a. Upto 10% in the maximum charges by the ZLCC concerned.
b. Upto 20 % in the maximum charges by the Functional COLCC(GM) at Corporate
Office.
** These expenses could be considered subject to the condition that the amount
does not exceed 10% of the total tuition fees for the entire course.
***It is likely that expenditure under item Nos. vi, vii & viii above may not be available
in the schedule of fees and charges prescribed by the college authorities. Therefore,
a realistic assessment may be made for the requirement under these heads.
However, the maximum expenses included under vi, vii & viii are capped at 20% of
the total tuition fees payable for completion of the course.
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 For courses under Management quota seats considered under IBA scheme for
meritorious students, fees as approved by the State Government /Government
approved regulatory body for payment seats will be taken, subject to viability of
repayment. Where either the State Government or any fee structure for a
particular course/ college is not stipulated, reasonable need based fee can be
considered while sanctioning loan to students. While computing loan required,
scholarships/assistantship are to be treated /included in margin.
In case of Nil tuition fees payable by the student , for sanction of loan for
other fees payable, it is to be based on tuition fees payable by other students
and it may be allowed upto 20%/10% of the same towards other fees.
Example: Total tuition fees payable for completion of course is assumed as
Rs.1,60,000/For payment of Caution deposit, Building fund/refundable deposit supported by
institution bills/receipts may be allowed upto 10% i.e., Rs.16,000/Payment for
a) Purchase of computer at reasonable cost, if required for completion
of the course
b) Purchase of books/equipments/instruments/uniforms
c) Any other expenses required to complete the course-like study tours, project
work, thesis, etc.
It is likely that expenditure under a,b&c above may not be available in the
schedule of fees and charges prescribed by the college authorities, a realistic
assessment may be made of the requirement under these heads. However,
the maximum expenses payable included under a,b& c are capped at 20%
i.e,Rs.32,000/2. Quantum of Finance:
Need based finance is to be worked out as per expenses eligible (1.3) above with
applicable margin and within the following ceilings.
Name of the product
Educational Loan IBA
Scheme Studies in India
Educational Loan IBA
Scheme Studies Abroad

Zonal Office level Second

in command Credit
committee (ZLSCC)
Rs.25.00 lakh

Zonal Office level Credit

committee (ZLCC)

Rs.50.00 lakh

Rs.60.00 lakh

Rs.50.00 lakh

However higher quantum of loan can be considered on case-to-case basis

level by appropriate authority.

at CO

Eligibility under CSIS:

Loans in excess of Rs.10 lakh also qualify for interest subsidy under Central Sector
Interest Subsidy Scheme (CSIS) for loan amount upto Rs.10 lakh only subject to
scheme guidelines like courses pursued in India, income ceiling etc.
Classification under Priority Sector: As per RBI Master Circular No. RBI/201516/53 dated 01.07.2015, Loans to individuals for educational purposes including
vocational courses upto Rs.10.00 lakh irrespective of the sanctioned amount will be
considered as eligible for priority sector.
3. Margin:
Upto Rs.4.00 lakh

: NIL

Above Rs. 4.00 lakh: Studies in India

: 5%
Studies Abroad
: 15%
Scholarship/ fee waiver/assistantship to be treated/ included in margin.
Margin may be brought- in on year-to-year basis as and when
disbursements are made on a pro-rata basis.
4. Security:
> Upto Rs.4.00 lakh: Parents to be Joint borrower(s). No security.
> Above Rs. 4 lakh and upto Rs.7.50 lakh: Besides the parent(s) executing the
documents as Joint borrower(s), collateral security in the form of suitable third party
guarantee is to be obtained. In exceptional cases ZLCC, at their discretion may
waive third party guarantee if satisfied with the net-worth/ means of parent/s, who
would be executing the documents as Joint borrower.
>Above Rs.7.50 lakh: Parent(s) to be joint borrower(s) together with tangible
collateral security, the market value of which is not less than the loan value,
acceptable to bank, along with the assignment of future income of the student for
payment of installments.
NOTE:
The loan documents should be executed by both the student and the parent /
guardian as joint-borrower.
The security can be in the form of land/ building/ Govt. Securities/ Public Sector
Bonds/ Units of UTI, NSC, KVP, life policy, gold, shares/ mutual fund units /
debentures, bank deposit in the name of student/ parent/ guardian/ any other third
party or any other tangible security acceptable to the bank with suitable margin.
Wherever the land/ building is already mortgaged, the unencumbered portion can
be taken as security on second charge basis provided it covers the required loan
amount. Extension/residual value of House property, if available may also be
accepted.
In case the loan is given for purchase of computer, the computer has to be
hypothecated to the Bank.
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5. Rate of Interest:
Base Rate (9.65%) + TP (1%) + Spread (1.30%) i.e.11.95% p.a. as at present.
Additionally 0.5 % p.a. concession in interest rate is available to girl students.
Simple interest during the Study period and holiday (Moratorium) period i.e
upto commencement of repayment.
Penal interest @ 2.00% for loan amounts above Rs.4.00 lakh for the overdue
amount and overdue period.
Servicing of interest during study period and the moratorium period i.e.till
commencement of repayment is optional for students. Accured interest to be
added to the principal amount borrowed while fixing EMI for repayment.
6. Appraisal / Sanction / Disbursement:
Parent(s)/student(s)
should
be
informed
of
the
checklist
of
documents/credentials required to be submitted by them along with the loan
application in one lot, to avoid time delay in processing, Clarifications if any
should also be informed in one lot only. Collecting information in piecemeal
should be avoided.
Applications received from the applicants should be forwarded to the
concerned Zonal Office then and there with all the required details for early
sanction, without giving room for any complaints.
Upon receipt of application, standard acknowledgement with reference number
is to be issued. The acknowledgement has to contain contact details of the
Branch Manager/ designated official who could be contacted in case of delay
in disposal of application.
Normally, sanction/rejection has to be communicated within 15 days of receipt
of duly completed application with supporting documents.
In the normal course, while appraising the loan, the future income prospects of
the student only will be looked into.
Rejection of loan application, if any, shall be done with the concurrence of the
controlling authority of the branch concerned and conveyed to the student
stating reason for rejection.
Normally, loan application is to be accepted by the branch nearest to the
residence of parents. However, the sanction of loan will be as per delegation
of powers by the bank.
The loan is to be disbursed in stages as per the requirement/ demand
directly to the Institutions/ Vendors of equipments/ instruments to the extent
possible.
7. Repayment:
Holiday / Moratorium

Course period + one year or six months after

getting job, whichever is earlier
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If the student is not able to complete the course within the scheduled time,
extension of time for completion of course may be permitted for a maximum period
of 2 years. If the student is not able to complete the course for reasons beyond his
control, sanctioning authority may at his discretion consider such extensions as
may be deemed necessary to complete the course. In case the student
discontinues the course midway, appropriate repayment schedule is to be worked
out in consultation with the student/parent.
The accrued interest during the study and holiday period is to be added to the
principal and repayment in Equated Monthly Installments (EMI) should be fixed.
If the interest charged during study and holiday period is serviced then and there,
a concession of 1% on the applicable interest rate for the period till the
commencement of repayment will be available at the time of closure of loan.
However, this concession is not applicable to student borrowers benefitted under
any interest subsidy scheme.
Repayment of the loan is to be fixed in equated monthly installments for periods as
under:
For loans upto Rs. 7.5 lakh
- upto 10 years
For loans above Rs. 7.5 lakh
- upto 15 years
8. Levy of Prepayment charges:
Pre-closure charges is waived in cases where payment is made by borrower(s)/
guarantor(s) from own source of funds. However, if any educational loan a/c
(including existing account) is pre-closed on account of taking over by other banks,
the pre-closure charges @ 2% of the balance outstanding or applicable drawing
limit whichever is higher should be collected.
9. Insurance:
Life Insurance policy on the students availing Educational Loan is to be solicited
under the New IB Jeevan Vidya Policy / IB Vidyarthi Suraksha for the loan limit
sanctioned, covering the entire period of loan i.e. Study Period, Holiday / Moratorium
Period and Repayment Period with the consent of the student applicant. The
premium payable on the policy may be considered as eligible amount for finance.
10.Follow up/ Tracking:
Tracking of student borrowers after completion of their course of study assumes
greater importance in the backdrop of the students seeking jobs/employment in
various parts of the country and outside the country migrating from place to place.
Branchess to contact college/university authorities to obtain the progress report of
the student at regular intervals in respect of students who have availed loans. In
case of studies abroad the SSN/Unique Identification Number [UIN]/ Identify Card
should be obtained and noted in banks records. The UID number issued by UIDIA is
to be captured in banks system as and when available. Branches may also obtain
PAN (Permanent Account Number) of the student, though not as a pre-condition for
loan sanction, but may ask the student to submit the same during the course of
studies for future tracking.
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11. Processing Charges/Other Charges:

No processing / upfront charges is to be collected on educational loans for studies in
India. For studies abroad, processing fee / upfront charges @ Rs.250/- per Rs.1.00
lakh of loan, with a minimum of Rs.250/-,should be collected while considering the
application for loan. However, we may refund the amount when the loan is
availed by the student so that students who avail educational loans are spared
of levy of processing charges.
EM charges, wherever applicable to be recovered.
CERSAI charges of Rs.500/- plus service tax or as per extant gudielines to be
recovered.
CIBIL/Experian charges etc. as applicable, to be recovered.
12. Capability certificate:
Some of the foreign universities require the students to submit a certificate from their
bankers about the sponsor's solvency/ financial capability, with a view to ensure that
the sponsors of the students going abroad for higher studies are capable of meeting
the expenses till completion of studies. Zonal Managers can issue the capability
certificate for students going abroad for higher studies. For this purpose financial and
other supporting documents should be obtained from the applicant. The procedure
for issue of 'Capability Certificate' and service Charges applicable are already
communicated vide our Circular No.ADV.53/2004-05 dated 10.08.2004. The
precautions to be taken for issue of capability Certificate is communicated in our
Circular No.adv.111/2013-14 dated 07.01.2014.
13. Subsidies :
Various subsidy schemes are available for studies in India and abroad for the loans
sanctioned under IBA scheme. They are
1. Central Scheme to provide interest subsidy (CSIS) for studies in India
2. Dr Ambedkar Central Scheme to provide interest subsidy to OBC and EBC
category (ACSISOBCEBC) for studies abroad
3. Padho Pardesh subsidy for minority community of students for studies abroad
The scheme guidelines are enclosed in the annexure. Income certificate from
appropriate authority specified in the scheme guidelines should be obtained at the
time of processing the loans and forms related to subsidy to be obtained at the time
of documentation.
14. Other conditions:
a. Sanction of loan to more than one child from the same family:
Existence of an earlier education loan to the brother(s) and/or sister(s) will not affect
the eligibility of another meritorious student from the same family for obtaining
education loan as per this scheme from the bank.
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b. Minimum Age:
There is no specific restriction with regard to the age of the student to be eligible for
education loan. However, if the student was a minor while the parent executed
documents for the loan, the undertaking letter (F-162) to be obtained from him/her
upon attaining majority.
c. Top up loans:
Top up loans may be considered to students pursuing further studies within the
overall eligibility limit, if such further studies are commenced during the moratorium
period of first loan subject to ensuring repayment capacity and taking required
security as per scheme norms. The repayment of the loan will commence after the
completion of the second course and further moratorium period, as provided under
the scheme.
d. Joint borrower:
The joint borrower should normally be parent(s)/ guardian of the student borrower. In
case of a married person, joint borrower can be either spouse or the
parent(s)/parents-in-law.
Wherever parents are not there i.e. both the parents are deceased or the student
has been abandoned by the parent(s) whose whereabouts are not known or
orphaned otherwise then grand parent can be considered as co-borrower taking into
account their networth with the approval of Zonal Manager.
15. No Due Certificate
No due certificate will not be insisted upon as a pre-condition for considering
educational loan. However, branches may obtain a declaration / an affidavit
confirming that no loans are availed from other banks.

16. Disposal of loan applications

Loan applications have to be disposed of in the normal course within a period of 15
days to 1 month, but not exceeding the time norms stipulated for disposing of loan
applications under priority sector lending.

17. Parking of staff related Educational Loans

Staff members can avail the loan at the branch where he/ she is working at present.
Staff working in administrative offices are permitted to avail their wards educational
loan through the branch at the centre where other loan accounts are parked and
salary drawn.
If the staff gets transferred, along with the other loan accounts, the educational loan
account shall also be transferred for monitoring.
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Wherever the staff stands as joint borrower or guarantor, necessary undertaking is to

be obtained to recover the installment/ interest if defaulted, from the salary of the
staff.

18. Flexibility in terms and conditions

In order to bring flexibility in terms like eligibility, margin and security norms,
relaxation may be considered on a case-to-case basis by the ZLCC concerned.
Zonal Offices / Branches are advised to meticulously adhere to the revised IBA
educational loan scheme guidelines with prudence and dispose applications without
giving room for any complaints.

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Annexure-2
Opening of new products under Educational loan (IBA scheme) named IB
Educational Loan Prime for Students of premier institutions like IIT/IIM/
XLRI/BITS/IISc and IB Educational Loan Prime - NIT for Students of NIT to
pursue Engineering, Science, Management courses, etc.

Indian Institute of Technology (IITs), Indian Institute of Management (IIMs), National

Institute of Technology (NITs), XLRI, Birla Institute of Technology and Science
(BITS) and Indian Institute of Science, Bangalore are ranked well among the top
educational institutions in India and abroad.
On a market study conducted by our Department, feedback received from our Zones
during the process of educational loan campaigns and also feedback received from
trainees at Image, it is observed that many Banks are offering finer rate of interest to
premier educational institutions. Hence to stay competitive in the market and also to
fall in line with majority of the banks, two new products under educational loan,
named as IB Educational Loan Prime for the meritorious students of IITs/IIMs/
XLRI/BITS and IISc under IBA Scheme, at Base Rate, presently 9.65 % p.a and IB
Educational Loan Prime - NIT for students of NITs at Base Rate plus 0.50 % i.e.
10.15 % p.a. as at present are introduced.
We furnish hereunder the details of the new product
Name of the College/Institution
Courses
offered
College/Institution
Beneficiaries

by

Loan Limit
Finer rate of Interest Proposed

Premier institutions namely

IITs/IIMs/NITs/XLRI/BITS/IISc
the Under Graduate and Post Graduate courses, etc.
Students joining the aforesaid targeted premier
institutions
Need based loan limit up to Rs.20.00 lakh under the
framework of IBA educational loan scheme.
1. For students of IITs/IIMs/ XLRI/BITS and IISc
Interest at Base Rate i.e.9.65% p.a as at present
and
2. For students of NITs
Interest at Base Rate plus 0.50% i.e.10.15 % p.a.
as at present.
No further interest concession to girl students is
envisaged.

As per Cir.Adv.94/2011-12 dated 16.09.2011, relaxation in terms like eligibility,

margin and security norms, may be considered by the concerned ZLCC on a
case-to-case basis for educational loans under IBA Scheme.

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Hence Sanctioning authorities may process/consider the applications on merits and

wherever relaxation is requested, the same may be considered based on merit of
individual cases.
The New Product codes are as follows:
1. IB Educational Loan Prime for students of IITs/IIMs/ XLRI/BITS and IISc
5924 - 0012 - IB EDUCATIONAL LOAN PRIME
5924 - 0013 - IB EDU- PRIME-TILRPMT-SI
2. IB Educational Loan Prime - NIT for students of NITs
5924 - 0014 - IB EDU- LN- PRIME-NIT
5924 - 0015 IB EDU-PRIME NIT TILRPMT-SI

Please note that all other terms and conditions are as per existing IBA scheme
guidelines.
Branches and Zones are hereby advised to take advantage of the reduced interest
rates and take immediate steps to bring into our fold the younger generation / new
connections which will pave way for development of human capital and cross selling
of our other products also.

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Annexure-3
Skill Loan Scheme

Indian Banks Association (IBA) vide letter No.RB/CIR/SLS/1051 dated 10.05.2015

has informed that Department of Financial Services, Government of India had
forwarded a Skill Loan Scheme for vocational courses. The Skill Loan Scheme was
examined by IBA and the same was approved by IBA Managing Committee on
26.06.2015. The Skill Loan Scheme replaces the existing IBA Model Loan Scheme
for Vocational Education and Training. IBA has forwarded the Skill Loan Scheme to
banks for adoption.
Our Board has accorded approval for adoption of the Skill Loan Scheme on
27.08.2015. The new scheme replaced the erstwhile IBA Model Loan Scheme for
Vocational Education and Training vide our Circular No. ADV.43/2012-13
dt.30.06.2012.

The Skill Loan scheme is eligible for coverage under credit guarantee scheme for
skill development which has been introduced by Government of India. GOI has
established National Credit Guarantee Trustee Company (NCGTC) for this purpose.
Our Bank has already become a Member Lending Institution (MLI) of NCGTC with
the approval of the Board on 02.02.2015.

Zonal Offices and branches are advised to implement the scheme in letter and spirit
and process the proposals strictly as per the scheme guidelines as detailed
hereunder.

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Operational Guidelines of Skill Loan Scheme

1. Introduction :
Given a huge thrust on skill development in recent years, a need is felt to provide
institutional credit to individuals for taking skill development courses aligned to
National Occupations Standards and Qualification Packs and leading to a
certificate/diploma/degree by the Training Institutes as per National Skill Qualification
Framework (NSQF). Thus, "Skill Loan Scheme"has been developed to support the
national initiatives for skill development.

2. Objective :
Skill Loan Scheme (herein after called 'Skilling Loan') aims at providing a loan facility
to individuals who intend to take up skill development courses as per the Skilling
Loan Eligibility Criteria.

3. Applicability of the Scheme :

This scheme is applicable to all member banks of IBA and any other banks and
financial institutions as may be advised by the RBI. The scheme provides broad
guidelines to the banks for operationalizing the skilling loan scheme and the
implementing bank will have the discretion to make changes as deemed fit. The
scheme may also be applicable to Microfinance Institutions (MFIs) and other
financial institutions regulated by RBI.

4. Eligibility Criteria
4.1 Training Institutes:.
Any individual who has secured admission in a course run by Industrial Training
Institutes (ITIs), Polytechnics or in a school recognized by central or State education
Boards or in a college affiliated to recognized university, training partners affiliated to
National Skill Development Corporation (NSDC)/Sector Skill Councils, State Skill
Mission, State Skill Corporation, preferably leading to a certificate / diploma / degree
issued by such organization as per National Skill Qualification Framework (NSQF) is
eligible for a Skilling Loan. The Government of India / State Governments may, from
time to time, notify institutes/organizations for the purpose.
4.2 Training Courses:
Courses run by above mentioned Training Institutes aligned to National Skill
Qualification Framework (NSQF) shall be covered by the Skill Loan. There is no
minimum course duration.
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4.3 Nationality:
The applicant should be an Indian National

4.4 Minimum Age:

There is no specific restriction with regard to the age of the student to be eligible for
skilling loan. However, if the student is a minor, while the parent executes
documents for the loan, the bank will obtain a letter of acceptance / ratification
from him / her upon attaining majority.
4.5 Minimum Qualification:
As required by the enrolling institutions/organizations as per NSQF.
4.6 Know your customer (KYC) norms:
Aadhar number will also be considered as a valid proof for KYC norms in addition to
other identity and address proof as determined by our bank from time to time.

5. Quantum of Finance
Loans will be in the range of Rs. 5,000/- to Rs. 150,000/-. The estimated per month
fees, based on sector & NSQF level, will be available with the NSDC. Skill loan could
be availed by beneficiaries of other grant/reward based Government schemes for
skill training to cover the cost of such skill training not covered under such
grant/reward.

6. Expenses Considered for Loan

6.1 Tuition / course fee. Banks shall pay such tuition / course fee directly to the
Training Institute
6.2 Any other reasonable expenditure found necessary for completion of the course
including but not limited to assessment fee, Examination fee, Library charges,
Laboratory fee, Caution deposit, Purchase(As such courses are localized boarding,
lodging may not be necessary based on the cost of living in the particular area.
However, wherever it has been found necessary, the same could be considered on
merit).

7. Margin
10%
- (The down-payment and the amount paid as interest during the course
together should not exceed 10% of the total course amount).
16

8. Rate of Interest
Our Bank has approved a concessional rate of interest for Vocational / Skill Loan
Courses. The approved rate is Base Rate 9.65% +Spread 0.50%+TP 1.00% i.e.
11.15% p.a. at present.

9. Processing Charges
No Processing fee will be charged by Banks.

10. Security
No collateral for such skilling loan will be taken. Banks have to apply to the National
Credit Guarantee Trust Company Ltd (NCGTC) for credit guarantee against defaults
and NCGTC will provide such guarantee at nominal guarantee fee which shall not
exceed 0.5% of the amount outstanding. Such credit guarantee cover will be for a
maximum of 75% of the outstanding loan amount (including interest, if any). In
special cases such as the North Eastern region (NE) and Left Wing Extremism
(LWE) affected areas the percentage may be increased on the discretion of NCGTC.
Banks may like a diversion on whether to pass on levy of guarantee fee to the
borrower or not.

11. Moratorium Period

In order to instill repayment behavior and get some commitments from the students,
the bank may have installment during the course period itself. However, the total
amount paid by the student as down-payment (Clause 7) and EMI during the course
together should not exceed 10% of the total course value.
However, it is advised that the banks consider moratorium for specific courses or
certain sections of the students. Upon completion of the course, repayment will start
after a moratorium period as indicated below:
Courses of duration upto 1 year
Courses of duration above 1 year

Upto 6 months from the completion of the course

12 months from the completion of the course

12. Repayment
The loan will have a tenure as follows:
Loans upto Rs.50,000
Loans between Rs.50,000 to Rs.1 lakh Loans above Rs.1 lakh
-

Upto 3 years
Upto 5 years
Upto 7 years

17

13. Insurance
Optional at the requirement of the borrower

14. Prepayment
The borrower can repay the loan any time after commencement of repayment
without having to pay any prepayment charges. In case a student is not able to
complete the course because of accident/death/disability the bank can seek a prorata reimbursement of the unfinished portion of the course amount from the training
institute. This will reduce the loan burden on the student.

15. Bank Mitra

Services of Bank Mitra may be used by the branches to popularize the scheme.
Such Bank Mitra will work as a bridge between bank, training institute and trainee/
loan aspirants. However, at no point of time can a training institute or an entity with a
significant stake in training (students of which will get the loan) be involved as Bank
Mitra. Training institutes and lending architecture (entities and people down to the
last mile) should be kept at arm's length to avoid any moral hazard or mis-selling of
the loan scheme. A bank employee or its bona fide agency representative should
necessarily meet the student to explain the loan details.

The relevant products are as follows:

Product Code

Product Name

5924 0016

EDULN-TILRPT-SI-SKILL CGS

5924 0017

EDU-LN-IBA-SKILL LOAN CGS

18

Annexure- 4
Other important guidelines / clarifications from IBA
1. Loans for pursuing studies in aided private colleges/ institutions and unaided
private colleges/ institutions, the Fee structure approved for similar course under
merit quota seats can be considered for students admitted through common
entrance tests or merit based selection process.
2. Aircraft Maintenance Engineering/ Pre-sea Training courses must be
either degree or diploma for getting loan under IBA educational loan
scheme.
3. Means of joint borrower/ parent is not to be considered as a factor for sanction
of educational loan. The student loan will not be affected by any change in
asset classification of any separate bank borrowing of the joint borrower.
4. Banks to require alternative co-borrower if parent of the applicant is an existing
NPA borrower.
5. Requests received from NRIs can be considered if student is Indian Passport
holder and they meet other eligibility requirements. However, it would be
necessary to accept as security any collateral which is enforceable in India.
6. In case of employment oriented courses like teacher training courses and 3
year technical diploma courses in polytechnic institutions after completion
of 10th standard, it has been clarified by IBA that banks are free to include such
employment oriented courses as eligible course for sanction of educational
loan to student borrowers provided they are offered by approved/recognized
colleges/institutions. However these courses are not eligible for interest
subsidy under Central Sector Interest Subsidy Scheme of MoHRD, as the
same is available only for loans given for Professional and Technical courses
after 12th Standard in India.(Ref: HO:RBD Circular ADV.84/2010-11 dt
18.09.2010). Hence the student borrowers in this category, who are availing
loan, have to be suitably informed by lending branches on non-availability of
subsidy at the time of sanction. Branches are advised to mark these accounts
as ineligible in the template and exclude borrowers in this category, while
claiming subsidy.
7. Refusal to finance outside branchs designated service area:

The Model Educational Loan Scheme has not stipulated a service area approach
to finance under the Scheme. While proximity to the residence of parents was
considered an advantage in KYC compliance,the scheme allows the student to
have a choice in deciding on the bank from where to borrow.
Though in certain areas/State, there has been a system of allocating villages/
wards in urban centers to different banks by SLBCs/DLCCs aiming to evenly
distribute loan applications, such arrangements should not preclude a student
from approaching any bank of his choice for sanction of loan. Hence branches
are advised not to reject loan applications merely for the reason that the
19

particular area is allotted to another Bank by SLBC/DLCCs. Service area norms

are to be followed only in case of /govt. Sponsored schemes and are not
applicable for Educational loans.
8. Delay in sanction of limits and repeated refusal of loan on flimsy grounds:

As per the Model Educational Loan Scheme, Educational Loan applications have
to be disposed of in the normal course within a period of 15 days to one month,
but not exceeding the time norms stipulated for disposing of loan applications
under priority sector lending.
No application for educational loan can be rejected by Branch Managers either
orally or in writing without the written concurrence of ZLCC and the reason for
rejection should be communicated to the students immediately
9. Utilisation of grievance redressal mechanism to resolve the complaints/issues

Suitable grievances redressal mechanism has been in operation and this

includes provision of toll free number for the public, existence of separate cell at
Corporate office to redress the grievances related to Educational Loans etc.
These arrangements need to be widely publicised with details of contact
person/escalation matrix etc at all levels by due display of such details.
10. Applications will be received either directly at bank branches or through Online
Mode. Students may submit their loan applications either at the bank branches
near to the residence of their parents or to the educational institution. However
after the loan is sanctioned, the cases be transferred to the bank branch near to
the institution for follow up with student / institution. The KYC compliance for the
purpose has to be done by the branch nearest to the residence of parents.
It is needless to mention that student applicants seeking educational loan shall be
treated with sympathy and human approach.
Suitable disciplinary action/ measures deemed fit by way of warning etc., shall be
initiated against those officials who repeatedly refuse/reject such loan applications.
Zonal Offices/ Branches are advised to meticulously adhere to the revised IBA
educational loan scheme guidelines with prudence and dispose of the applications
without giving room for any complaints.

20

Annexure-5

NON-IBA SCHEME
Educational Loan (Non - IBA Scheme) for pursuing higher education in India
and Abroad

Non-IBA scheme was introduced from 10.10.2011 to provide an alternative

opportunity to the segment of aspiring students who secured admission under
Management Quota to pursue their education.
The scheme guidelines are as follows:
1.ELIGIBILITY CRITERIA
Student / Course eligibility

The student should be an Indian National.

Students who secured admission under Management Quota.
Students who secured minimum 60% marks or equivalent grade in the
qualifying examination.
Students pursuing job oriented courses which are neither a degree nor a
diploma.
Courses not considered under IBA scheme irrespective of basis of
admission.
Studies- Abroad not covered under IBA Educational Loan scheme.
Any course with assured placement (not covered under IBA scheme).
Entry level scoring should not be less than BBB

Courses offered only by the Colleges, Universities, Deemed Universities and other
Educational Institutions as identified by the Bank shall be considered for sanction of
Educational Loans under this scheme.
Zonal Managers can identify the institutions based on the reputation of the institute
by taking into account the affiliation, management, infrastructure, pass percentage,
placement etc. for entertaining applications. Sanction of educational loans to
students pursuing courses in Institutions producing low quality to be avoided.

2. ELIGIBLE EXPENSES
i.

College fee/ Reasonable hostel charges*

ii. Examination/ Library/ Laboratory fee.

iii. Travel expenses/ passage money for studies abroad
iv. Insurance premium for student borrower.
21

v. Caution deposit, Building fund/ refundable deposit supported by Institution

bills/ receipts.**
vi. Purchase of books/equipments/ instruments/ uniforms ***
vii. Purchase of computer at reasonable cost, if required for completion of the
course***
viii. Any other expenses required to complete the course like study tours, project
work, thesis, etc. ***
Notes:
*Reasonable lodging and boarding charges will be considered in case the student
chooses/is required to opt for outside accommodation as under IBA scheme. .
** These expenses could be considered subject to the condition that the amount
does not exceed 10% of the total tuition fees for the entire course.
***It is likely that expenditure under item Nos. vi, vii & viii above may not be available
in the schedule of fees and charges prescribed by the college authorities. Therefore,
a realistic assessment may be made of the requirement under these heads.
However, the maximum expenses included under vi, vii & viii are capped at 20% of
the total tuition fees payable for completion of the course.
Relaxation in the quantum may be considered by the Sanctioning authority, based
on the value and nature of security offered and on a case- to-case basis.
3. QUANTUM OF FINANCE
Need based finance subject to the employment potential for the course and repaying
capacity of the parent(s)/ students within the following ceiling.
Name of the product
Educational Loan Non
IBA Scheme Studies in
India
Educational Loan Non
IBA Scheme Studies
Abroad

Zonal Office level Second

in command Credit
committee (ZLSCC)
Rs.25.00 lakh

Zonal Office level Credit

committee (ZLCC)

Rs.50.00 lakh

Rs.60.00 lakh

Rs.50.00 lakh

However higher quantum of loan can be considered on case-to-case basis at CO

level by appropriate authority.
Priority Sector : As per RBI Master Circular No. RBI/2015-16/53 dated 01.07.2015,
Loans to individuals for educational purposes including vocational courses upto
Rs.10.00 lakh irrespective of the sanctioned amount will be considered as eligible for
priority sector.
22

4. MARGIN
Studies in India - 10%
Studies Abroad - 20%
Scholarship/ assistantship if any to be included in margin.
Margin may be brought-in on year-to-year basis as and when disbursements
are made on a pro-rata basis. Sources for such margin to be satisfactory to
the Bank.
5. SECURITY
Upto Rs. One lakh Parent(s) / guardian to be joint borrower(s). No other collateral
security is needed.
Above Rs. One lakh upto Rs.Four lakh Besides the Parent(s) / guardian
executing the documents as joint borrower(s), collateral security in the form of
suitable third party guarantee with networth acceptable to the Bank will be taken.
Above Rs. Four lakh
Parent(s) / guardian to be joint borrower(s).
Tangible collateral security of suitable value acceptable to bank, along with the
assignment of future income of the student for payment of installments.
(i) Market value of the security should be equivalent to the loan amount if student/
parents opt to service the monthly interest as and when charged.
(ii) Market value should not be less than 150% of the loan amount if servicing of
interest during the study and holiday period is not opted.
Note:
The security can be in the form of land/ building/ Govt. securities/ Public Sector
Bonds/Units of UTI, NSC, KVP, life policy, gold, shares/mutual fund
units/debentures, bank deposit in the name of student/ parent/ guardian / any
other third party or any other tangible security acceptable to the bank with suitable
margin.
Wherever the land/ building is already mortgaged, the unencumbered portion can
be taken as security on second charge basis provided it covers the required loan
amount. Extension/Residual value of House Property, if available may also be
accepted.
Normally agricultural Lands should not be accepted as collateral security. However
as per Loan Policy 2014-15, agricultural lands can be considered as collateral for
purposes other than the agricultural activity by the level of ZLCC and above, after
taking into account the local State Government guidelines.
The loan documents should be executed by both the student and the
parent/guardian as joint-borrower.
23

6. RATE OF INTEREST
Interest to be charged at rates linked to the Banks Base rate
Simple interest during the Study period and holiday (Moratorium) period i.e
upto commencement of repayment.
Penal interest @ 2.00% for loan amounts of above Rs.4.00 lakh for the
overdue amount and overdue period.
Note: Servicing of interest during study period and the moratorium period till
commencement of repayment is optional for students.

7. APPRAISAL / SANCTION/ DISBURSEMENT

As discussed under IBA scheme.

8. REPAYMENT
Holiday / Moratorium Course period + one year or six months after getting
Period
job, whichever is earlier
If the student is not able to complete the course within the scheduled time,
extension of time for completion of course may be permitted for a maximum period
of 2 years. If the student is not able to complete the course for reasons beyond his
control, sanctioning authority may at his discretion consider such extensions as
may be deemed necessary to complete the course. In case the student
discontinues the course midway, appropriate repayment schedule is to be worked
out in consultation with the student/parent.
(i) If the interest charged during study and holiday period is serviced as and when
charged, concession of 1% on the applicable interest rate for the period till the
commencement of repayment will be available at the time of closure of loan.
However, this concession is not applicable to student borrowers benefitted under
any interest subsidy scheme.
(ii) If the interest charged during the study and holiday period is not serviced as
and when charged, the accrued interest during the study and holiday period is to
be added to the principal and repayment in Equated Monthly Installments (EMI)
should be fixed.
Repayment of the loan is to be fixed in equated monthly installments for periods as
under:
For loans upto Rs. 7.5 lakh

- upto 10 years

For loans above Rs. 7.5 lakh

- upto 15 years

24

9. INSURANCE
Branches/ Sanctioning authorities to ensure that the student borrowers are
covered under the group life insurance policy under New IB Jeevan Vidya (offered
by LIC) /IB Vidyarthi Suraksha (offered by IB Met Life) or under any other policy,
as desired by the student borrowers.
10. PROCESSING CHARGES
Processing / upfront charges to be levied as given below:
a) for loans upto Rs.4 lakh - Rs. 100/- flat
b) for loans above Rs.4 lakh - Rs.250/- flat
c) For loans for pursuing studies abroad - 0.25% per lakh with a minimum of
Rs.250/d) EM charges, wherever applicable to be recovered.
e) CERSAI charges of Rs.500/- plus service tax or as per extant gudielines to be
recovered.
f) CIBIL/Experian charges etc, as applicable to be recovered.
11. Minimum Age Limit
Studies in India: 15 years 30 years
Studies Abroad: 18 years 35 years.
12. Joint Borrower
The joint borrower should normally be parent(s)/guardian of the student borrower. In
case of a married person, joint borrower can be either spouse or the
parent(s)/parent(s)-in-law.
13. Sanctioning Authority
At present the sanctioning powers is vested with ZLSCC onwards, (for details vide
Discretionary Power Booklet)
14. Flexibility in terms
In order to bring flexibility in terms like eligibility, margin and security norms,
relaxation may be considered on a case-to-case basis by the ZLCC concerned.
15. Disposal of loan application
Loan applications have to be disposed of in normal course within a period of 15 days
to one month, but not exceeding the time norms stipulated for disposal of loan
applications under priority sector lending.
Branches are advised to meticulously adhere to the scheme guidelines with
prudence and dispose of applications without giving room for any complaints.
25

Annexure-6
Vidya Lakshmi Portal: A common Web Portal for applying for Educational Loan

IBA vide their letter Cir/RB-ELS/3 dated 06.08.2015 has informed that IBA Managing
Committee had approved certain changes to the IBA Model Education loan Scheme
as suggested by the Reserve Bank of India and Government of India. One of the
suggestions contained in the RBI proposal, approved by the Ministry of HRD and
DFS was establishment of a common portal for students to apply for loans and to
facilitate tracking and follow-up of the loan during its life cycle.
Accordingly a portal, named as Vidya Lakshmi Electronic Platform, has been
developed by NSDL e-Governance. It is a portal providing single window featuring
Information about Educational Loan Schemes of Banks, Common Educational Loan
Application Form for Students, Facility to apply to multiple Banks for Educational
Loans and Dashboard facility for Students to view status of their loan application
and Linkage to National Scholarship Portal for information and application for
Government Scholarships. NSDL has quoted Rs.250/- levy on approved
applications, to be debited to the Loan account.
As desired by DFS, IBA has requested all banks to connect to the Vidya Lakshmi
Portal, so that the following benefits can be achieved:
a) Enabling achievement of certain objectives of Pradhan Mantri Vidya Lakshmi
Karyakram
b) Centralised Grievances Redressal mechanism for Education Loans
c) Centralised information and tracking of Education Loans and MIS/Dashboard
for DFS/Ministry of HRD
d) Economies of scale may enable reduction in charges
Accordingly, CO: RBD in coordination with HO: TMD has developed a new interface
in the In-House Applications namely Vidya Lakshmi- Educational Loan and now
our Bank is connected to Vidya Lakshmi portal. The various steps involved in the
process are as follows:
a) Student has to log in Vidya Lakshmi Portal viz., www.vidyalakshmi.com and
choose Education Loan Scheme and Bank of his choice to apply for loan.
b) CO: RBD has to log in Vidya Lakshmi Bank Portal, download the applications
received and upload the same in the In-House Application - Vidya LakshmiEducational Loan on a daily basis.
c) Branch has to log in the In-House Application - Vidya Lakshmi- Educational
Loan with their AML/ A&L/ CSIS User Id and Password, on a daily basis to check if
any loan application is marked against their branch. Branch has to download the
application, process the application, mark the status and submit.

26

d) Zonal Office also has to log in the In-House Application - Vidya LakshmiEducational Loan on a daily basis to check if any loan application is forwarded to
ZO by branches. Nodal Officers in the Zonal Office can log in the portal with their
AML/ A&L/ CSIS User Id and Password. The loan application received from
branches are to be processed and the corresponding status to be marked and
submitted.
e) CO: RBD will download the status marked by Branch/ Zonal Office against each
education loan application and upload the status in the Vidya Lakshmi Bank Portal
on a daily basis.
f) Student can view the status of their application as and when updated by the Bank.
He can also mark his grievances in the Portal.
We advise the branches to educate students/ customers approaching the branch for
education loan, to visit the website www.vidyalakshmi.com.
Processing of Education loan Application and Timeline:
ZO/ Branch may refer to Master Circular Adv.88/2014-15 dated 13.11.2014 on
Education Loan, for processing of Education Loan Applications. The status of
Education Loan Application is viewed directly by DFS, MoF. Hence the
Branches/Zones are advised to strictly adhere to the guidelines and time norms for
disposal of applications. As per the Model Educational Loan Scheme, Educational
Loan applications have to be disposed of in the normal course, within a period of 15
days to one month, but not exceeding the time norms stipulated for disposing of loan
applications under priority sector lending.
Rejection of Application:
No application for educational loan can be rejected by Branch Managers either orally
or in writing without the written concurrence of ZLCC and the reason for rejection
should be communicated to the students by updating the status in the portal and also
enter the reasons for rejection in the Remarks column.

27

Annexure-7
Educational loan product codes
1. The following product codes have been allotted for the Educational Loan (IBA
Scheme)

5924
5924
5924
5924

0001
0002
0006
0007

EDU.LON STUDIES IN INDIA

EDU.LON STUDY ABROAD
EDU.LON TILL RPMT -SI-INDIA
EDU.LON TILL RPMT -SI-ABROAD

2. The following product codes have been allotted for the Educational Loan
(Non IBA Scheme).
5924
5924
5924
5924

0003
0004
0008
0009

EDU.LOAN-STUDY IN INDIA-NON IBA SCHEME

EDU.LOAN-STUDY ABROAD--NON IBA SCHEME
EDU.LOAN-TIL RPMT-SI-INDIA-NON IBA SCHEME
EDU.LOAN-TIL RPMT-SI-ABROAD-NON IBA SCHEME

3. The following product codes have been allotted for the Skill Loan Scheme
5924-0016 EDULN-TILRPT-SI-SKILL CGS
5924-0017 EDU.LN-IBA-SKILL LOAN CGS
4. IB Educational Loan Prime for students of IITs/IIMs/ XLRI/BITS and IISc
5924 - 0012 - IB EDUCATIONAL LOAN PRIME
5924 - 0013 - IB EDU- PRIME-TILRPMT-SI
5. IB Educational Loan Prime - NIT for students of NITs
5924 - 0014 - IB EDU- LN- PRIME-NIT
5924 - 0015 IB EDU-PRIME NIT TILRPMT-SI
General Guidance for opening of Educational loan accounts
While opening of accounts, branches are advised to enter the correct product code,
as the accounts for subsidy claim are identified from CBS, based on the product
codes only. Similarly branches to ensure correctness of the loan term period and
repayment commencement date.
Notes:
Course period: The remaining course period from date of opening of the account.
Holiday period: Six months (or) One year as per sanction ticket.
Loan term period : Course Period + Holiday Period + Repayment period.
28

Annexure - 8

Tracking of student borrowers/Effective monitoring and follow up of educational loans

Tracking of student borrowers assumes greater importance in the backdrop of the
students seeking jobs/employment in various parts of the Country / Abroad and
migrating from place to place. In the process, it is necessary to constantly keep a
track of the whereabouts of the student borrower, co borrower and guarantor for
monitoring the repayment of loan.
Some of the lapses observed while following up of individual NPA educational loan
accounts with branches concerned are listed below:
1. There is no information whether the student has completed his/her studies,
whether he / she got employed.
2. There is no deferment of repayment of educational loan in case the student
continues his/her studies by availing second loan.
3. There is no notice of reminder to the students from the branch regarding
commencement of repayment of EMI when it becomes due as per the repayment
schedule.
4. There is no follow up from the branch once the account becomes NPA. There is
no concrete action initiated towards recovery of NPA such as informing the
Employer of the student borrower about the liability and attempting for recovery
from salary, failure to enforce securitisation act wherever applicable, etc.
5. Some of the branches informed that the present whereabouts of the student
borrower and co borrower are not known. This cannot be accepted as it clearly
shows lack of monitoring by the branches concerned.
We would like to reiterate some of the action points that have to be adopted by
the branch for better and effective monitoring:
Whenever, further installments are requested by the borrower, branch should
release the installment only on receipt of the request in writing, which include
current address, email id, mobile number, academic record etc.,
During each semester of study, the student borrower should be required to send
at least two letters to the branch at suitable intervals informing the progress made
in studies, his / her personal achievements and other related matters.
Progress can also be ascertained from the concerned College Authorities directly
in case of delay or non receipt of information from the student borrower.
The Branch Manager should respond to such letters in a positive way by
sending letter of appreciation for the achievement of the student, by suggesting
measures to overcome constraints faced by the student, etc., wherever deemed
necessary. A copy of such letters should be sent to the parents of the student
also.
29

 During final year of studies, the branch should write a letter to the College /
Institute to get details about the student borrower viz. the placement details
(wherever applicable) any change in the residential address of the student, etc.,
as per the specimen format given in the Annexure. Branch Manager should send
letter of congratulations to the student borrower who has been successful in
securing placement. Branches should not wait for such information to be given to
them by the student or parents on their own.
Zonal Offices/ Branches are advised to organize Student meets with cluster of
branches inviting the final year students. A data sheet may be provided to all the
participants to enable them to update their personal details informing the Name,
Branch Name, Loan Account Number, Current Address, Mobile No., e-mail id,
present position of study, likely date of completion of study, campus placement (if
any) etc. which may be used by the concerned branches to update their
borrowers profile / records. Such Students Meets strengthen the bondage with
the student borrowers and create awareness among them about the repayment
of educational loan.
After completion of courses, contacting the colleges / institutions from where the
students have passed out exams, finding out from the student alumini / old
student association the present address / employment status of the student
borrowers and other such latest information about the student borrower can be
gathered.
Parent / Guarantor / co borrowers should be personally contacted at their given
address to ascertain the current details of the student and his employment status.
Towards the end of the holiday period i.e. well before commencement of
repayment period, the student borrower should be reminded of commencement
of EMI , amount of EMI to be repaid, etc. and request him / her to keep up the
repayment regular.
If repayments are not forthcoming, the student borrower should be again
reminded under copy to the co borrower / guarantor (wherever applicable).
Branches may also take up with the concerned Employers wherever applicable
and considered necessary.
Zonal Managers should periodically review the SMA position of educational loan
accounts keeping in mind the above aspects, which will facilitate reduction of
accumulation of NPA accounts and to build up a quality asset portfolio under this
category

30

SPECIMEN LETTER TO BE SENT TO EDUCATIONAL INSTITUTION DURING

THE FINAL YEAR OF STUDY

To
The Principal,
----------------------------------------

Dear Sir,
Sub: Educational Loan sanctioned to Mr. ________________, final year student
of _________ course of your institution verification of credentials reg.

With reference to the above, we wish to inform that the above mentioned student has
availed educational loan of Rs.________ from our Bank, the final installment of
which has been released on __________. We understand that the student is in the
final year of the course and he is about to take his final examination during
________. In this regard, we request you to kindly inform us whether the student
has got any placement in the campus interview and if so the full details of such
placement.
Also, please inform us the outcome of the final examination result of the student as
and when made public and the students address for communication as per your
office records.
Seeking your kind co-operation in this regard,
Thanking you,
With regards,
Yours faithfully,

Branch Manager
31

Annexure-9 (i)
Central Scheme to provide Interest Subsidy to Educational Loan (CSIS)
The salient features of the Central Scheme to provide Interest Subsidy to Educational Loan
accounts.

The Scheme is linked to the IBA Model Educational Loan Scheme. The Scheme came
into effect from the academic year 2009-10 and would cover loan amount disbursed by banks
from 1st April, 2009 onwards.

The Scheme is applicable for pursuing any of the approved courses of studies in technical
and professional streams from recognized Institutions in India.

It is restricted to students enrolled in recognized professional courses after Class XII in

India in educational institutions established by acts of Parliament, institutions recognized by
statutory bodies, institutions set up by Central Government.

The scheme is applicable for Study in India only.

As per the scheme, annual gross parental / family income from all sources is not above
Rs.4.50 lakh. Income proof should be obtained from designated authorities approved by
respective State Government / U.T. for this purpose (e.g. for Tamilnadu from Zonal Deputy
Tahsildar) and to be submitted to the lending branch.

The interest subsidy is available upto the moratorium period viz. course period plus one year
or six months after getting job, whichever is earlier.

The interest subsidy is admissible in respect of courses where the fee structure is more than
Rs.10 lakh. However for calculation of interest subsidy, the same should be calculated for
loans up to Rs.10 lakh,

The Interest subsidy is available only once either for the first undergraduate degree course or
the post graduate degrees / diplomas in India.

Templates are provided in Help Desk > Other Websites> In-house Application>Educational
loan

Subsidies> Existing CSIS. Branches have to enter the details for eligible accounts in
template. The accounts which are not eligible should be marked ineligible. Zonal Offices
should authorize the details in template then and there.

Canara Bank has been designated as the Nodal Bank to administer the interest subsidy
claims on behalf of other banks.

The details of the Scheme have been hosted in the website of Ministry of HRD as well as
IBA.
MoHRD:
http://www.education.nic.in/uhe/IntSubsidyon
ELS.pdf
and
IBA:http://www.iba.org.in.

circulars Adv.53/2010-11 dt. 06.07.2010, Adv.84/2010-11 dt.18.09.2010 ,Adv.40/2011-12

dt.06.06.2011 , Adv.26/2013-14 dt. 31.05.2013, and Adv.51/2014-15 dated 08.07.2014 and
Adv.88/2015-16 dated 01.08.2015

32

PADHOPARDESH SUBSIDY

Annexure 9 (ii)

This is a Central Government Scheme to provide interest subsidy to the students belonging to the
communities declared as minority communities in terms of section 2 (c) of National Commission for
Minorities Act, 1992, on the interest payable upto the period of moratorium for the Education Loans
under the Scheme of interest subsidy on Educational Loans for Overseas Studies to pursue approved
courses of studies abroad at Masters and Ph. D levels.
Salient Features of the Scheme:
1. The Interest subsidy is available for educational loans sanctioned to students of minority
community upto the moratorium period (course period + holiday period).
2. The Interest subsidy is available for the educational loans sanctioned after 01.04.2013 under IBA
scheme
3. The Interest subsidy is available for the educational loans sanctioned to pursue
Masters/M.Phil/Ph.D. courses abroad. (Detailed course list is enclosed in the Data structure).
4. Students of minority community whose annual family/parental income is not more than Rs.6.00
lakh are eligible under the scheme. Income certificate should be submitted from the notified
authority in the State/Union territory.
5. Interest Subsidy is available towards the amount of interest charged for educational loans for limit
upto Rs.20.00 lakh. If an educational loan is sanctioned for more than Rs.20.00 lakh, interest
subsidy will be available for the interest charged for the limit upto Rs.20.00 lakh only.
6. The benefit of 1 % interest reduction in the interest rate offered by Banks in normal course on
Pre-payment of interest during the moratorium period shall be passed on to the students.
7. If the student violates any condition of the scheme, the subsidy will be discontinued forthwith.
8. If a student is found to have obtained the subsidy by false statement/certificate, the subsidy will
be withdrawn/cancelled forthwith and the amount of subsidy paid shall be recovered with penal
interest, apart from taking criminal action, as per law.
9. The students obtaining benefits under this Scheme shall not be given the interest subsidy if he
gives up Indian citizenship during the tenure of the loan.
10. The Bank has to ensure that the students from the minority communities, who may also belong to
SC/ST/OBC category, do not avail interest subsidy from other sources for the same purpose.
11. The interest charged upto the moratorium period will be borne by Government of India. After the
moratorium period is over, the interest on the outstanding loan amount shall be paid by the
student in accordance with the existing Educational Loan Scheme as may be amended from time
to time. The candidate will bear the Principal installment and interest beyond moratorium period.
12. Templates are provided in Help Desk > Other Websites> In-house Application>Educational loan
Subsidies> Padho Pardesh. Branches have to enter the details for eligible accounts in template.
The accounts which are not eligible should be marked ineligible. Zonal Offices should authorize
the details in template then and there.

13. The Nodal Bank for this scheme is Canara Bank.

33

14. Circulars Adv.49/2014-15 dated

Adv.117/2014-15 dated 27.10.2014.

05.07.2014,

Adv.60/2014-15

ACSISOBCEBC SUBSIDY

dated

01.08.2014

and

Annexure 9 (iii)

Ministry of Social Justice and Empowerment, Government of India, has launched the new Scheme of
Dr. Ambedkar Interest Subsidy on Educational Loan (IBA Scheme) for Overseas Studies for
OBCs/EBCs.
Details of the schemes are as below:
1. The scheme is applicable for educational loans for higher studies abroad sanctioned under IBA
scheme only.
2. The interest subsidy under the scheme shall be available to the eligible students only once, either
for Masters or Ph.D levels. Interest subsidy shall not be available to those students who either
discontinued the course mid-stream due to any reason, or those who are expelled from the
institutions on disciplinary or academic grounds.
3. Interest charged for the educational loans during the moratorium period (course period + holiday
period) is provided as subsidy. The candidate will pay the Principal installments as well as interest
beyond moratorium period.
4. If the educational loan is sanctioned for more than Rs.20.00 lakh, the eligible loan component is
reckoned as Rs.20.00 lakh only for the purpose of interest subsidy claim.
5. The scheme is applicable for courses leading to Masters (including PG Diploma), M.Phil and Ph.D
courses only.
6. The scheme is envisaged to provide interest subsidy to two target groups; OBCs and EBCs.
7. The income ceiling for OBCs is Rs.3.00 lakh p.a., and for EBCs Rs.1.00 lakh p.a.
8. The income certificates provided by appropriate authority designated by State Government/ITR
forms/Form 16/Audited accounts are acceptable to determine the income ceiling.
9. For the scheme for OBCs, those who are included in the Central List of OBCs are only eligible
(the respective state lists shall not be followed). The Central List of OBCs (State wise) can be
found in the NCBC website (ncbc.nic.in). The OBC certificate in the prescribed proforma issued
by the competent authority has to be obtained.
10. If a student violates any condition of the scheme, the subsidy will be discontinued forthwith.
11. If a student is found to have obtained the subsidy by false statement/certificates, the subsidy will
be withdrawn/ cancelled forthwith and amount of the subsidy paid shall be recovered with penal
interest, apart from taking criminal action as per law.
12. The students obtaining benefits under this scheme shall not be given the interest subsidy, if he
gives up Indian citizenship during the tenure of the loan.
13. The scheme is implemented with effect from 01.04.2014 and claims should be submitted on
quarterly basis.
14. Templates are provided in Help Desk > Other Websites> In-house Application>Educational loan
Subsidies> ACSISOBCEBC. Branches have to enter the details for eligible accounts in template.
The accounts which are not eligible should be marked ineligible. Zonal Offices should authorize
the details in template then and there.
15. Canara Bank has been designated as the Nodal Bank for the scheme.

34

16. Circulars Adv.79/2015-16 dated 22.07.2015, Adv.112/2015-16 dated 03.09.2015.

Annexure - 10
Circulars are ordered by date with latest at the top

Circular Database
No.

Title

Date

Dept.

Subject

Main Sub

ADVSL-09
164

2015RBD
11-30

Vidya Lakshmi Portal: A common Web Portal for applying for Educational
Loan

202

ADVSL-08
163

2015RBD
11-30

Adherence of RBI guidelines in respect of Educational Loan.

202

ADVSL-06
112

2015RBD
09-03

Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loan

for Overseas studies for Other Backward Classes (OBCs) and Economically
Backward Classes (EBCs) ACSISOBCEBC (effective from 2014-15)

202

ADVSL-05
99

2015RBD
08-19

Opening of new products under Educational loan (IBA scheme) named "IB
Educational Loan Prime" for Students of premier institutions like IIT/IIM/
XLRI/BITS/IISc and "IB Educational Loan Prime - NIT" for Students of NIT
to pursue Engineering` Science` Management courses` etc

202

ADVSL-04
88

2015RBD
08-01

Central Scheme to provide Interest Subsidy to Educational Loan accounts

[CSIS] Error free submission of claims

202

ADVSL-03
79

2015RBD
07-22

Dr.Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loan

for Overseas studies for Other Backward Classes (OBCs) and Economically
Backward Classes (EBCs) ACSISOBCEBC (effective from 2014-15

202

ADVSL-01
25

2015RBD
05-18

Educational Loan Complaint free environment

202

ADVSL-15
203

2015RBD
03-27

Educational Loan -Review of Educational Loan complaints.

202

ADVSL-14
198

2015RBD
03-23

IBA Model Educational Loan Scheme for pursuing Higher Education in India
and Abroad List of A rate universities/colleges institutions

202

ADVSL-12
179

2015RBD
03-04

Adherence of IBA Educational Loan Scheme guidelines for complaint free

environment Refusal to finance outside branchs allotted service area.

202

ADVSL-10
141

2014RBD
12-17

Introduction of additional fields in CBS (Bancs) system for educational loan

accounts

202

ADVSL-09
117

2014RBD
10-27

Padho Pardesh Scheme of Interest Subsidy on Educational Loans for

Overseas Studies for the students belonging to minority communities
(effective from 2013-14)

202

ADVSL-07
88

2014RBD
09-11

Master Circular on Educational loan Schemes

202

ADVSL-05
57

2014RBD
07-30

Central Scheme to provide Interest Subsidy to Educational Loan accounts

[CSIS] Error free submission of claims.

202

ADVSL-06
60

2014RBD
08-01

Padho Pardesh Scheme of Interest Subsidy on Education Loans for Overseas

Studies for the students belonging to the minority communities (effective from
2013-14)

202

ADVSL-04
51

2014RBD
07-08

CENTRAL SCHEME TO PROVIDE INTEREST SUBSIDY(CSIS) ON

EDUCATIONAL LOANS - CLARIFICATIONS BY MINISTRY OF

202

35

HUMAN RESOURCES DEPARMENT.

ADVSL-03
49

2014RBD
07-05

Padho Pardesh Scheme of Interest Subsidy on Education Loans for Overseas

Studies for the students belonging to the minority communities (effective from
2013-14)

202

ADVSL-01
22

2014RBD
05-19

New CSIS scheme Clarification regarding obtention of Income Certificate

and procedure for submission of claim for Interest Relief on Educational
Loans

202

ADVSL-12
120

2014RBD
03-01

Relief on interest outstanding component as on 31.12.2013 for educational

loans sanctioned/availed upto 31.03.2009 and outstanding as on 31.12.2013.

202

ADVSL-11
118

2014RBD
02-14

Educational Loans for studies abroad to pursue courses in Medicine

202

ADVSL-010
111

2014RBD
01-07

Irregularities in issuing Financial Capacity Certificate for submission to

Foreign Universities Education Loan.

202

ADVSL-09
102

2013RBD
12-17

Recovery of Education Loan Adopting reprehensible practices

202

ADVSL-08
96

2013RBD
12-02

Central Scheme to provide Interest Subsidy to Educational Loan accounts

[CSIS] Complaint free environment.

202

ADVSL-07
88

2013RBD
11-14

Service area norms are not applicable for Educational Loans.

202

ADVSL-06
86

2013RBD
11-09

Allotment of Product code for IBA Model Loan Scheme for Vocational
Education and Training.

202

ADVSL-05
84

2013RBD
11-06

TMC observations Effective monitoring of Educational loan accounts.

202

ADVSL-04
71

2013RBD
09-14

Asset classification of restructured Education Loan accounts

202

ADVSL-03
51

2013RBD
08-01

Fair Lending Practices Code Educational Loan

202

ADVSL-01
21

2013RBD
05-13

Central Scheme to provide Interest Subsidy to Educational Loan accounts

Details of names of accredited Universities / Institutions administered by the
Ministry of Tourism` eligible under the scheme.

202

ADVSL- 12
142

2013RBD
02-23

TMC observations- Increase in NPA in Educational Loan portfolio a causing

concern- Requirement of close follow up to curtail the increase of NPA.

202

ADVSL-11
129

2013RBD
02-06

AFI Observations- Non Adherence of guidelines on charging of simple interest

for Educational Loan accounts up to Moratorium period and Classification of
unsecured Restructured Educational Loan as Standard Assets.

202

ADVSL-10
120

2012RBD
12-27

Adherence of Educational Loan Scheme Guidelines for Complaint Free

Environment

202

ADVSL- 08
91

2012RBD
11-06

Educational Loan Scheme- Hassle Free Credit Flow

202

ADVSL-07
78

2012RBD
10-09

Amendments in existing IBA Model Educational Loan Scheme -2011

202

ADVSL-06
64

2012RBD
09-11

IBA Model Educational Loan Scheme- Hassle Free Credit Flow

202

ADV- SL-05

2012- RBD

Modifications in IBA Model Loan Scheme for Vocational Education and

202

36

63

09-03

Training

ADVSL- 04
60

2012RBD
08-28

SERVICING OF INTEREST IN EDUCATIONAL LOANS ADHERENCE

OF GUIDELINES

202

ADVADV-48
48

2012RBD
07-17

Amendments in existing IBA Model Educational Loan Scheme for pursuing

higher studies in India and abroad

202

ADVSL-02
43

2012RBD
06-30

IBA Model Loan Scheme for Vocational Education and Training

202

ADV CRMKTG
- 07
30

2012PBD
05-22

EDUCATIONAL LOANS SANCTIONING POWERS

204

ADVCRM-02
05

2012RMD
04-17

REVISED SCORING MODEL FOR EDUCATIONAL LOAN (IBA & NonIBA)

211

ADVSL- 01
01

2012RBD
04-03

Interest Subsidy Scheme of MoHRD on Educational Loan Scheme for students

belonging to EWS- Issues discussed at the meeting of Sub Committee on
Educational Loan Scheme held on 20.01.2012 and decision taken- reg.

202

ADVSL- 08
144

2012RBD
01-20

Educational Loan Uniform Loan Policy for Hostel and Mess charges.

202

ADVSL- 07
142

2012RBD
01-10

Educational Loan System generated product change and repayment schedule

regeneration

202

ADVSL- 06
107

2011RBD
10-10

Educational Loan (Non IBA Scheme) for pursuing higher education in India
and Abroad

202

ADVSL-05
94

2011RBD
09-16

Revised IBA Educational Loan Scheme - 2011

202

404

Provision of Group Life Cover to Educational Loan Student Borrowers

CRA- ANC.SER- 2011BASC Introduction of New Scheme - " IB VIDYARTHI SURAKSHA " by
62
08-06
76
arrangement with M/s MetLife India Insurance Co Ltd.

37