Canara Bank IBA Model Education Loan Scheme

Canara Bank IBA Model Education Loan Scheme

The IBA Model Education loan helps students who want to pursue higher studies in India and abroad afford the cost of the course and related expenses. This quantum of the loan is defined on a case-to-case basis subject to a ceiling (“ceiling” has not been defined by the bank’s website).

Features of IBA Model Education Loan Scheme for Pursuing Higher Studies in India and Abroad

Why this Loan?

• The loan is meant to help students fulfil their dreams of pursuing higher education in India or abroad
• The loan is disbursed as a series of payments over the required number of years and not as a lump sum
• Can be taken for all institution fees as well as related expenses including for purchase of books, laptops, etc. or payment of hostel fees, lab fees, examination fees, and so on

Loan Amount

• The maximum loan amount depends on the needs of the student on a case-to-case basis subject to ceiling
• The ceilings are defined under the Indian Bankers Association (IBA) Model Education Loan Scheme, which puts the maximum limit at Rs. 10 lakh for studying in India and Rs. 20 lakh for studying abroad

Interest

• For Loan up to Rs. 7.5 lakh: The rate of interest is a sum of 1-year MCLR and a factor of 2% where MCLR is the Marginal Cost of Funds-Based Lending Rate. As of November 2020, the MCLR of Canara Bank is 7.35% which brings the rate of interest at 9.35% for the IBA Model Education Loan
• For Loan Above Rs. 7.5 lakh: The rate of interest is a sum of 1-year MCLR and a factor of 1.5%. With the Canara Bank MCLR at 7.35%, this makes the rate of interest 8.85%
• For girl students, the interest rate on the loan is lower than the standard rate by 0.5%
• The interest can be paid voluntarily during moratorium though the principal doesn’t have to be paid. You can avail a concession of 0.5% for repayment of interest during the moratorium period
• The moratorium period for this loan scheme is course period plus 12 months after the completion of the course

Repayment

• The loan amount for each year is repayable in equated monthly instalments up to a period of 15 years after the end of the moratorium period
• This means that you pay only interest during the moratorium period and then EMIs every month until the complete repayment of the loan

Security Needed

• For loan up to Rs. 7.5 lakh: No collateral security is required. The loan will be covered under the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) subject to the conditions
• For loan above Rs. 7.5 lakh: Tangible collateral security that covers at least the quantum of the loan is required

Eligibility

• The applicant must be a resident Indian national (Indian citizens who have stayed in the country for over 180 days in the last financial year)

Eligible Courses

• Graduate, postgraduate, including technical or professional courses from reputed colleges or universities approved by UGC, State or Central Government, AICTE, Department of Electronics, IMC, autonomous institutions like IIM, IIT, etc.
• Any courses leading to degree or diploma from reputed institutes, colleges or universities for studies in India
• Courses which lead to graduate or postgraduate degree or diploma, PhD, etc. are eligible for foreign studies

Margin Money (Borrower Contribution to the Total Cost)

• Loans up to Rs. 4 Lakh: The borrower does not have to offer any margin money to get the loan
• Loans above Rs. 4 Lakh to Study in India: The borrower must offer 5% of the loan amount as margin money to get the loan
• Loans above Rs. 4 lakh to Study Abroad: The borrower must offer 15% of the loan amount as margin money to get the loan

Note: Margin money refers to the amount the borrower contributes to the overall amount required. Suppose a house costs Rs. 40 lakh in which case the borrower usually has to provide a margin money percentage of 15-25% of the total house value while the lender bank offers the rest.

Processing and Other Charges

• There are no processing or documentation charges for this loan

Other Features to Know

• The loan is granted jointly with the parent/guardian (co-borrower) of the applicant
• The bank may ask the borrower to submit progress report during the course
• The loan is disbursed directly to the school, book seller or publisher, computer seller, and so on and not to the applicant(s)
• Also, the borrower should submit loan application to the bank branch near the educational institute where they want to study or nearest to the residence of parents

Documents Needed

• Application Form duly filled and signed by applicant and/or guarantor along with details of applicant and/or guarantor and family
• Two Passport Size Photographs of student, applicant and/or guarantor
• Photocopy of PAN Card of the student that needs to be submitted at the time of application or during the course period
• Personal Identification Proofs (Any One): Electoral I-Card, Passport, Driving License, PAN Card or Aadhaar Card
• Residential Address Proof (Any One): Electricity Bill, Landline Telephone Bill, Electoral or Voter ID Card or Passport
• Admission Letter, Course Details and Prospectus
• Fee Details with Demand of Fee by the Institution
• All Proofs of Past Academic Record including Mark Sheets and Certificates