Overview:

IDBI Bank provides educational loans to students to pursue higher education in India and abroad. Deserving students, according to their eligibility and requirements, can choose from a number of financial loans and repayment options offered. IDBI educational loans help students procure financing options to secure their future.

Features and Benefits:

The IDBI Educational Loan scheme consists of four types:

1. Non Vocational Courses:

This is offered for students of Indian nationality having secured admission through merit-based selection or entrance test process after completion of HSC (10+2) for higher education in recognized institutions in India and abroad. This includes studying in Premier Education Institutes, including IIMs, IITs, ISB, and for the ICAI Chartered Accountancy course and for special courses.

It is also offered for students who have secured admission under Management Quota although eligible under merit, meaning the student has secured marks above the cut-off level required for merit-based admission according to the General/Girls/SC/ST/OBC specifications for that institution.

Type of courses:

a) Studies in India:

• Approved courses for graduation or post-graduation and PG diplomas by universities or colleges recognized by UGC, Govt., AICTE, AIBMS, IMCR, etc.
• Job-oriented courses for technical or professional degrees, postgraduate and diplomas in recognized institutions.
• Technical diplomas after 10^th standard, offered by approved polytechnic institutions (usually three years).
• In case of dual courses, where part of the course is abroad, the domestic course will be considered.
• Approved courses offered by reputed foreign schools/universities in India.

b) Studies Abroad:

• Graduation for job-oriented technical or professional courses offered by reputed universities.
• Post-graduation for MBA, MS, MCA, etc., and approved diploma courses.
• Courses by CPA in USA, CIMA-London, etc.

Special courses:

• Degree or diplomas for pilot training, shipping, aeronautical by recognized regulatory bodies for the purpose of employment in India or abroad.

Expenses Covered:

1. Fees payable to the school, college, hostel.
2. Fees for examination, laboratory, library.
3. Books, uniforms, equipment, instruments.
4. Expenses for any computers or laptops required for the course.
5. Travel expenses incurred during the course.
6. Building fund or caution deposit with institution bill. Amount should not exceed 10% of total tuition fees for the entire course.
7. Insurance premium for student, if sought.
8. Any other expenses required to complete the course such as thesis, projects, and study tours.
The maximum expenditure under D, E, F, G and H should be no more than 50% of the total tuition fees for the course.

Amount given for education loan:

According to the repaying capacity of the parents or students, the loan amount is decided subject to a maximum of Rs. 10 lakhs for studies in India and Rs. 20 lakhs for studies abroad. In case of executive programmes, the maximum loan amount should not exceed Rs. 20 lakhs in India or abroad.

Interest rates:

The IDBI educational loan interest rate for non-vocational courses qualifying as per Priority Sector Lending (PSL)

Rates for students in Premier Education Institutes (including ISB) is 10.00% (BR+0.00%)

For those students who secured admission under Management Quota the rate of interest is 13.50% (BR+3.50%).

Repayment tenure:

As per the IDBI educational loan procedure, the moratorium period is up to 1 year after the duration of the course or 6 months after getting a job, whichever is earlier. After this period, the duration repayment tenure is:

Security:

• No security required for loans up to Rs. 4 lakhs.
• Third party guarantee is required for loans above Rs. 4 lakhs and up to Rs. 7.5 lakhs.
• For above Rs. 7.5 lakhs:
  • Building/land (not agriculture) – the minimum value should be 1.33 times the amount of the loan.
  • Units of UTI, NSC, KVP, LIC policy, Govt. securities, Public Sector bonds, gold, share/mutual fund, debentures, and bank deposit in the name of the student, parent, guardian or third party – the minimum value should be 1.1 times or as per the respective margin limit against the security, whichever is lesser, of the amount of the loan.
  • The bank may accept any other tangible security with suitable margin.

Margin:

For loans above Rs. 4 lakhs, 5% of the total cost of the course is applicable.

2. Vocational courses:

Educational loans offered to Indian nationals having secured admission in a course run or supported by an organization or department of the Government. Or an organization supported by State Skill Corporations, State Skill Mission, or National Skill Development Corporation. It is preferable if it leads to a certificate, diploma or degree issued by an organization recognized by the Government or a Government organization itself.

Type of courses:

Vocational or skill development courses, the duration of which is 2 months to 3 years.

State Level Banker’s Committee or State Level Coordination Committee may add other skill development courses leading to employment.

Expenses considered:

1. Tuition or course fees.
2. Fees for examination, laboratory and library.
3. Books, equipment, instruments.
4. Caution deposit.
5. Insurance premium for student, if sought.
6. Any other expenses required to complete the course to be considered on merit.

Amount given for education loan:

Finance is based on the duration of the course and is given on need basis:

Interest rates:

The rate of interest is 11.00% (BR+1.00%).

Repayment tenure:

The moratorium period for courses up to the duration of 1 year is 6 months after the completion of the course.

For courses above 1 year duration, it is 12 months after the completion of the course.

After this period, the duration repayment tenure is:

Security:

Collateral or third party guarantee is not required. The parent will be required to execute the loan documents jointly.

3. Admission secured through management quota:

This loan is offered to Indian citizens or applicants residing in India who have secured admission through management quota, or secured admission under this as he/she did not qualify for merit quota.

Type of courses:

Any job-oriented courses offered by educational institutions located in India approved by statutory authorities like UGC, AICTE, etc.

Age eligibility:

As per the IDBI education loan eligibility, there is no minimum age limit, but the maximum age should be 50 years at the time of loan maturity. For the co-applicant, listed below is the age requirements:

Amount given for education loan:

The maximum amount of loan given is up to Rs. 10 lakhs.

Interest rates:

The rate of interest is 13.50% (BR+3.50%).

In case of change of institution before disbursement, a fee of Rs. 1,000 + taxes will be applicable. There will be no increase in the loan amount already disbursed.

Repayment tenure:

The moratorium period is inclusive of the duration of the course + 6 months. Simple interest is charged during this period.

The loan can be repaid at any time up to 120 months excluding the moratorium period.

Security:

For this loan, no guarantees are required but primary security is mandatory.

• Primary security can be in the form of tangible security such as building, land (not agricultural) and the value of which must be 1.33 times the amount of the loan sanctioned at the time.
• If opting for mortgaging immovable property, the process needs to be followed as per the home loan.

In case the primary security is insufficient, collateral like NSC, LIC policy, FD and so on, could be considered to bring the loan ratio minimum to 1.33%.

• The surrender value of LIC policy will be considered at the time of sanctioning the loan. The residual maturity period of the policy should equal the tenure of repayment.
• Fixed deposits should be held with IDBI only. The residual tenure of the FD or NSC should equal the repayment tenure of the loan. It should also be in the name of the applicant or co-applicant.
• For any other security, it should adhere to the guidelines for loans against respective security.

Margin:

Before each disbursement, 15% of the total cost of the programme must be paid upfront irrespective of the loan amount and place of study. Disbursement may be in full or in stages as needed.

4. Education loan under financial inclusion:

This loan is aimed at customers from areas covered under Financial Inclusion Program (FIP) allotted by the RBI to IDBI bank.

Customers who have a 10^th standard pass with 45% marks minimum are eligible. The minimum age requirement in 15 years. The co-applicant should have a savings bank account or an account under Bio-metric Smart card. Security is not required.

Types of courses:

Job-oriented courses offered by recognized institutions who have government approval like:

1. Certificate courses from ITI
2. Engineering diploma
3. Computer certificate course
4. Nursing / Teacher Training certificate courses and B.Ed.
5. Data entry operator course
6. Veterinary diploma
7. Agri diploma
8. Any job-oriented diploma or certificate course

Expenses covered:

1. Tuition fees.
2. Examination, laboratory, library fees.
3. Caution deposit.
4. Books, equipment, instruments.
5. Insurance premium for student, if sought.
6. Any other expenses required to complete the course to be considered on merit

The maximum expenditure under D, E and F should be no more than 50% of the total tuition fees for the course.

Amount given for education loan:

The amount given is Rs. 2 lakhs.

Interest:

The IDBI education loan rate of interest is 11.75% (BR+1.50%).

Repayment tenure:

For all loans further details are furnished below:

Documents required

1. IDBI Bank Educational Loan application form
2. Residence and age proof
3. Income proof of parents or guardians with income-tax proof for 2 years.
4. Income proof, proof of tax paid, security details of guarantors.
5. A copy of the certificate or prospectus from the principal/head of the institution to calculate expenses.
6. Copy of statement of marks or certificates of last examination passed.
7. A confirmation of student’s admission from the institution.
8. For loans which require security, details of security offered with advocate’s search and report about its marketability, mortgage ability, and so on, must be furnished.
9. Sources of margin - documents of proof are required.
10. For studies in USA, I-20 form is required.
11. Consent for assigning LIC policy of the student to the bank, stating that the premium will be paid to continue to policy during the duration of the loan, if the loan exceeds specified amount.

Processing fees:

There are no processing fees applicable for studies in India. Legal charges and stamp duty (if applicable) is as per actuals.

For studies abroad, 1% of the loan amount up to a maximum of Rs. 5,000 plus taxes is applicable and will be refunded at the time of disbursement (including service tax), credited to the savings bank account with approval of the Branch Head, if and when availed by the borrower.

For other Management quota students, 1% of the loan amount plus service tax up to a minimum of Rs. 1,000 plus taxes are applicable.

Prepayment:

Prepayment is allowed at any time during the repayment of the loan without charges.

For other management quota students, part payment is allowed any number of times subject to a minimum of Rs. 25,000.

If the foreclosure is before 6 months from the date of the first EMI, 2% on the amount of prepayment will be charged.

Penalties:

Penal interest is charged at 2% p.a. for loans above 4 lakhs for the amount or period overdue.

Balance transfer:

Transfer from other FI to IDBI Bank is allowed subject to complying norms only for loans for non-vocational courses.

BT for vocational courses and loans under management quota is not allowed from other banks to IDBI Bank Ltd.

Subsidy scheme:

For students from economically weaker sections with the combined parental income of up to Rs. 4.5 lakhs p.a., the Ministry of HRD, Government of India, has formulated the Central Interest Subsidy Scheme which covers the full interest during the moratorium period of the loan. This scheme is available to students pursuing approved technical or professional courses in India after class 12. The maximum loan amount is Rs. 10 lakh.

The subsidy scheme is available to eligible students only once either for graduation or post-graduation. Combined undergraduate and post-graduate courses will be considered.

Processing fee:

The processing fee is as per the IDBI bank’s existing educational loan policy.

Documents required:

• Interest Subsidy Application form duly filled in. The format of application form is in Annexure III.
• Income proof to be certified by competent authorities designated by the respective State Government. The list of authorities are given in Annexure-IV. The RACs/branches have to collect the certificate of income proof from the applicants when they receive the education loan proposal for existing and new cases.
• Separate agreement to be executed between student borrower and IDBI Bank on applicable stamp paper (Annexure-IV).

Other documents required and the process remains the same as per the existing IDBI education loan scheme.

IDBI Educational Loan FAQS:

1. How will IDBI decide the loan amount I am eligible for?
The loan amount you are eligible for is determined on a number of factors, namely the total cost of the course, your repayment ability, and security or collateral offered, if needed.
2. Can I repay the loan through the duration of the course?
No. The EMIs on loans will usually begin 1 year after course completion or 6 months after employment, whichever is earlier. You can pay the interest charged monthly during the moratorium period. You could also prepay the loan after the moratorium period is over. Sometimes there are charges on prepayment.
3. How is interest charged on education loans?
Interest is charged monthly on a simple interest basis from the time of disbursement as per the rate given by the bank on your particular loan. Interest calculations will start as and when amounts are disbursed to you and not on the entire loan amount at once.
4. What is an EMI? How many EMIs will I have to pay?
An Equated Monthly Instalment, or EMI, is the monthly payment due to the lender or bank towards the repayment of a loan or purchase. EMIs are charged on a fixed date. The EMI is calculated based on the principal loan amount, interest rate and the tenure of loan. The number of EMIs you have to pay depends on the loan amount you have applied for, the duration of the course and the loan tenure.
5. Are there any concessions available to students on educational loans?
Students from lower economic status can apply for subsidy schemes provided by the Government. This covers the interest charged during the moratorium period.
6. Can I apply online for an educational loan?
Yes, there are options to apply online.
7. Am I eligible for a loan if my course is both in India and abroad?
Yes, the course is considered for a loan, or a part of the course will be approved.
8. What is the process of educational loans?
For an educational loan, the general process to follow is first you need to fill out the application form and submit it to the bank. There will be a personal discussion. You will have to secure and provide validated supporting documents. After this is a stage of loan approval or denial. The bank will require the borrower's signature on a promissory note. The loan amounts will be disbursed on need basis.