AndhraNews.Net - No security for education loans upto Rs. 4 lakh

New Delhi: August 9, 2004

In consonance with Finance Minister's announcement in the Budget 2004-05, Indian Banks Association has issued a circular on July 23, 2004 to all member banks not to ask for collateral on education loans upto Rs. 7.5 lakh.

Accordingly, now no security is required for loans upto Rs. 4 lakh, only a satisfactory third party guarantee is enough for loans above Rs. 4 lakh and upto Rs. 7.5 lakh and collateral security of suitable value is required for loans above Rs. 7.5 lakh.

Comprehensive Education Loan Scheme was started on 28.4.2001. Under the Scheme, upto Rs. 7.5 lakh Loan is admissible for studies within the country and upto Rs. 15 lakh for studies abroad. No collateral or margin is required for loans upto Rs. 4 lakh. For loans of higher amounts, the margin requirement is 5% for inland and 15% for studies abroad. The rate of interest on loans upto Rs. 4 lakh is Prime Lending Rate (PLR) and for loans above Rs. 4 lakh is PLR + 1%.

The Education Loan Scheme had been very successful since its launch in the year 2001. As against roughly 50,000 accounts and Rs. 670 crore loan on March 31, 2001, the number of accounts have gone upto approximately 1,53,000 and loan amount to Rs. 2600 crore on March 31, 2004.

Press Release: PIB

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