Looking for some respite from your education loan interest bill without success?

It is possible with an interest subsidy scheme. This page contains all the information you will need on Government of India’s Interest Subsidy Schemes for Education Loans as offered by Central Bank of India.

Government of India Interest Subsidy Schemes for Education Loans

Central Bank of India allows its education loan applicants to apply for interest rate subsidies under three government schemes, viz.

  • Central Sector Interest Subsidy Scheme
  • Padho Pardesh Scheme of Interest Subsidy on Education Loans for Overseas Studies for Students Belonging to the Minority Communities
  • Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Educational Loans for Overseas Studies for Other Backward Classes (OBC) and Economically Backward Classes (EBC)

Let’s look at each subsidy scheme in some detail.

Features of Central Scheme of Interest Subsidy for Education Loans

Why this Subsidy Scheme?

Under this scheme, the Central Government takes care of any interest component that arises during the moratorium phase of an education loan taken by economically weaker students. 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.

Loan Amount

Eligibility

  • The scheme is only available for economically weaker students who are pursuing technical or professional education studies in India. Economically weaker sections refer to families that earn a gross yearly income of up to Rs. 4.5 lakh
  • The students will have to show an income proof from such public authorities as are authorised by the state governments for certification of income status for this scheme and other central and state sector schemes
  • The scheme will be available to eligible students only once, either for their first undergraduate, post-graduate degree or diploma courses in the country. They may avail this subsidy for integrated graduate and post-graduate courses
  • The scheme will not apply to students who stop pursuing studies (unless it was for a medical reason) or are expelled from the institute

Eligible Courses

  • The subsidy scheme will apply to courses from all accredited universities and institutions, and professional courses recognised by UGC, AICTE, etc.
  • The Interest Subsidy Scheme on Education Loans will also apply to courses in Central Institutes of Hotel Management and Catering Technology, State Institutes of Hotel Management and Catering Technology, Food Craft Institutes and Indian Institutes of Tourism and Travel Management that are administered by the Ministry of Tourism. You can find the list on the Central Bank of India website

Interest

  • The interest rates charged on the educational loan during the moratorium period are borne by the Government of India
  • Once the moratorium phase ends, the student will be liable to pay the interest on the outstanding loan amount in accordance with the education loan scheme availed

Tags with Certificates

  • The certificates of students who have availed the scheme will have a tag or a marker that indicate their repayment liabilities to future employers

Other Features to Know

  • This is a 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
  • Canara Bank is the nodal bank for the Ministry of Human Resources Development for this subsidy scheme

Features of Padho Pardesh Scheme of Interest Subsidy on Education Loans for Overseas Studies for the Students Belonging to the Minority Communities

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.

Eligibility

  • 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 is capped at 400 each year for the whole country at the time of writing, 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 become eligible for the subsidy in a year, 140 will be earmarked for girls. If enough girl students do not apply, the quota can be transferred to body students
  • 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
  • The scheme will not apply to students who are expelled by the institution, 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 Central Bank of India

Interest

  • 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 Central 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 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
  • If the applicant is found to have forged the documents or any type of fraud to avail the subsidy, the amount of subsidy paid will be recovered with penal interest in addition to taking criminal action in accordance with the laws

Features of Dr. Ambedkar Central Sector Scheme of Interest Subsidy for Educational 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 education courses taken by students belonging to economically backward classes (EBCs) or other backward classes (OBCs). 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.

Loan Amount

  • The interest subsidy scheme is available on only up to Rs. 20 lakh of the loan amount. This means any interest accruing during the moratorium period on the loan amount in excess of Rs. 20 lakh will have to be paid for by the applicant. To take an example, if loan is for Rs. 30 lakh, interest on Rs. 20 lakh will be covered under the scheme and the interest on the remaining Rs. 10 lakh will be paid for by the applicant as per the terms of the Central Bank of India Education Loan

Eligibility

  • The scheme is only available for students belonging to economically backward classes (EBCs) or other backward classes (OBCs) who are pursuing Masters, MPhil and PhD Level education studies outside India.
  • For OBC candidates, gross yearly income of the student (if employed) or family (if student is unemployed) should be less than that specified for the creamy later
  • For EBC candidates, gross yearly income of the student (if employed) or family (if student is unemployed) should be Rs. 2.5 lakh or less
  • OBC students need to show their caste certificate issued by the competent authority to Central Bank of India
  • The students will have to show an income proof such as Form 16, Income Tax Return, Audited Accounts or an income certificate from authorities of the state or UT governments
  • 50% of the approved applications will be earmarked for girls
  • The scheme will be available to eligible students only once, either for their postgraduate or higher degree or for integrative courses
  • Due to budgetary constraints, all deserving applicants cannot avail the subsidy scheme. It is granted on a first-come-first-serve basis subject to ceiling set by the Ministry
  • The scheme will not apply to students who stop pursuing studies or to those who give up on Indian citizenship

Eligible Courses

  • Approved Masters, MPhil and PhD courses are eligible for the Dr. Ambedkar Central Sector Scheme of Interest Subsidy for educational loans taken from Central Bank of India
  • Any course that has classes in India and abroad will be eligible if the degree is awarded by the foreign university is also eligible

Interest

  • 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 principal and interest on the outstanding loan amount in accordance with the provisions of the Educational Loan availed

Other Features to Know

  • The list of OBC categories will be defined as per the Central list of OBCs which can be seen from the National Commission for Backward Classes (NCBC) website (www.ncbc.nic.in)
  • The approvals happen on first-come first-served basis which is further dependent on the total budget available in the year for the scheme
  • The scheme falls under the Ministry of Social Justice & Empowerment which shall make a region-wise allocation of funds at the start of each fiscal year
  • The list of eligible applications will be screened by a Selection Committee comprising of a Joint Secretary in-charge of Backward Classes, representatives from the Finance division, a representative of the Nodal Bank and the Director or Deputy Secretary who handles the scheme
  • The nodal bank for the scheme is Canara Bank
  • The Dr. Ambedkar Central Sector Scheme of Interest Subsidy 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
  • If the applicant is found to have forged the documents or any type of fraud to avail the subsidy, the amount of subsidy paid will be recovered with penal interest in addition to taking criminal action in accordance with the laws

Reference Facts

  • Central Bank of India Website: www.centralbankofindia.co.in and www.centralbank.net.in (net banking)
  • Headquarters: Mumbai, Maharashtra
  • Call Centre Toll-Free Number: 1800 22 1911, 1800 110 001, 1800 180 1111