Looking to Reduce Your Education Loan Interest Bill?

You have come to the right place. This page contains all the information you will need on Government of India’s Interest Subsidy Schemes for Education Loans as offered by Bank of India.

Government of India Interest Subsidy Schemes for Education Loans

Bank of India allows its education loan applicants to apply for interest rate subsidies under one interest subsidy scheme, viz.

  1. Padho Pardesh Scheme of Interest Subsidy for Education Loans

Let us look at it in some detail.

Features of Bank of India Padho Pardesh Scheme of Interest Subsidy for Education Loans

Why this Scheme?

Under this scheme, the Central Government takes care of any interest component that arises during the moratorium phase of an overseas education loan for postgraduate or higher studies taken by students belonging to minority communities. The moratorium usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier.


  • The scheme is only available for students belonging to the minority communities who are pursuing Masters, MPhil or PhD level studies outside India. Minorities will refer to communities declared as such under section 2 (c) of National Commission for Minorities Act, 1992
  • The maximum number of students who can avail this subsidy in a year is capped at 400 for the whole country, with specific numbers assigned to each community in each state or union territory. However, reading details in the Ministry of Minority Affairs website shows that the number of approved students are usually in excess of the cap of 400
  • 35% of the approved applications will be assigned to girls. This means that if 400 students who become eligible for the subsidy in a year, 140 will be earmarked for girls
  • The student (if employed) or his parents (if the student is unemployed) must have yearly income of Rs. 6 lakh or less
  • The scheme will be available to eligible students only if they apply for it in their first year of studies and not later
  • The payment of the benefit may be linked with the student’s Aadhaar Number if available
  • The benefit will be provided for only one course, either for post-graduate degree or higher degree levels like PhD or DPhil
  • The scheme will not apply to students who stop pursuing studies or to those who give up Indian citizenship

Eligible Courses

  • Courses in arts, humanities, social sciences, commerce, pure sciences and related fields are eligible
  • All engineering and related courses such as marine engineering, petrochemical engineering, cryogenic engineering, etc. are eligible
  • All medical and veterinary courses as well as biomedical courses are eligible
  • Food and agricultural courses such as plant pathology, horticulture, farm power & machinery, etc. are eligible
  • IT courses, MCA and MBA courses are also eligible for the Padho Pardesh Interest Subsidy Scheme for loans taken from Bank of India


  • The interest rates subsidy will be available for the moratorium period. This time usually comprises of the duration of the course and an additional time of 12 months after completion of the programme or 6 months after landing a job, whichever is earlier
  • Once the moratorium phase ends, the student will be liable to pay the interest on the outstanding loan amount in accordance with the provisions of the Educational Loan Scheme of Banks

Other Features to Know

  • The application process happens through a specific portal that is opened once every fiscal year for fresh applications by Bank of India on the direction of Ministry of Minority Affairs
  • The portal may be opened every quarter for renewal cases
  • The list of eligible applications will be screened by a Selection Committee comprising of an Additional Secretary or Joint Secretary who is in-charge of the scheme and will Chair the committee, Joint Secretary and Financial Advisor or his or her representative, a representative of the Designated Bank (Canara Bank) and the Director or Deputy Secretary who handles the scheme
  • The nodal bank for the scheme is Canara Bank
  • The Padho Pardesh Scheme is linked to the comprehensive model educational loan scheme that was formulated by the Indian Banks’ Association (IBA) for adoption by all scheduled banks and aims at providing financial support from the banking system to deserving or meritorious students to pursue higher education in the country or abroad

Reference Facts

  • Bank of India Website: www.bankofindia.com and www.bankofindia.co.in
  • Headquarters: Mumbai, Maharashtra
  • Call Centre Toll-Free Number: 1800 220 229, 1800 103 1906

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