Punjab and Sind Bank Model Education Loan Scheme for Pursuing Higher Studies

PSB Model Education Loan Scheme for Pursuing Higher Studies in India and Abroad

The PSB Model Education Loan, also known as 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. The maximum loan amount for studying in India is capped at Rs. 10 lakh. For studying abroad, the maximum loan amount is Rs. 20 lakh. This quantum of the loan is decided on a course-to-course basis by the bank.

Features of Punjab & Sind Bank Model Education Loan Scheme

Why this Loan?

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

Loan Amount

• The maximum loan amount for studying in India is capped at Rs. 10 lakh. For studying abroad, the maximum loan amount is Rs. 20 lakh. Higher loan amount can be approved depending on the needs of the student on a course-to-course basis.

Interest

• Loans Upto Rs. 7.5 Lakh: The interest rate is the sum of the Repo Rate of 4% and a spread of 5.1%, making the effective rate of interest 9.1%
• Loans Over Rs. 7.5 Lakh: The interest is the sum of the Repo Rate of 4% and a spread of 4.6%, which makes the effective rate 8.6%
• No penalty is levied for prepayment of the loan any time after the commencement of repayment

Repayment

• The PSB Model Education 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
• The moratorium period for this loan scheme is course period plus 12 months after the completion of the course
• The bank may allow borrowers to divide the moratorium period into three spells not exceeding 6 months each during the lifecycle of the loan or extension of repayment period. This is to help the borrower deal with any situation like unemployment, underemployment, etc. subject to the terms included in the loan agreement

Security Needed

• Loans up to Rs. 4 lakh: No collateral security is required to avail this loan. Parents must be co-borrowers
• Loans Above Rs. 4 lakh up to Rs. 7.5 lakh: Collateral security in the form of third-party guarantee is required to avail this loan. Parents must be co-borrowers. Third-party guarantee is waived if the loan is covered under the Credit Guarantee Fund Scheme for Education Loans (CGFSEL)
• Loans Above Rs. 7.5 lakh: Parents must be co-borrowers of the loan. Tangible collateral of suitable value and assignment of future income of the student is mandatory for this loan

Eligibility

• The PSB Model Education Loan applicant must be a resident Indian national (Indian citizens who have stayed in the country for over 180 days in the last financial year)
• The student must have secured admission in a higher education course in a recognised institute in India or abroad

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 course costs Rs. 20 lakh in which case the borrower may have to pay Rs. 1 lakh for an Indian course (5% of course cost) or Rs. 3 lakh for an overseas course (15% of course cost). Punjab & Sind Bank will offer the rest.

Processing and Other Charges

• There are no processing or documentation charges for this loan to study in India
• To study abroad, the borrower must deposit Rs. 2,000 as processing fee. It is kept under reserve in Savings Account till the loan is availed else, it is recovered by the bank. Read this page for more details about PSB processing charges

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)
• Diploma and Certificate courses are not covered under this scheme

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

Reference Facts

• Punjab & Sind Bank Website: www.psbindia.com
• Headquarters: New Delhi
• Call Centre Toll-Free Number: 1800 419 8300