Guide to NRI Education Loan
State Bank of India was the first one to introduce education loan in 1995 after which education became a quick selling product in loan product list of many other banks. Banks nowadays are providing education loan to both residents and Non-Resident Indian (NRIs).
Meaning of NRI Education Loan – It is financial assistance to deserving / meritorious students for pursuing higher professional / technical studies in India or abroad. This loan is designed to cater to the education expenses like admission cost, cost of study material, tuition fees, maintenance costs etc. Deposits can also be financed under the purview of this scheme.
Features of NRI Education Loan
- Depending upon the purpose of NRI education loan the amount may vary from Rs 4Lac to Rs 20 Lac.
- This loan scheme also enables you to finance deposits through it.
- If you wish to avail this loan you will have to qualify the entrance test conducted by the institution you are interested in joining.
- You will be able to pay off your entrance exam fees, cost incurred in tuition fees, dissertation, purchase of computer essential for course, miscellaneous expenses which incur in project work, thesis and tours, library fees, uniform fees etc. through this loan.
- Computer Courses which are conducted by institutes who have received accreditation by the Department of electronics, Government of India.
- Any other specialized course in Computer Science.
- All professional as well as technical courses including certificate courses, diplomas; graduate/ Post graduate and/ or doctorate degree studies in recognized schools / colleges / Institutions.
- It also includes Courses in Medicine, Surgery, Dental Science, Architecture, Veterinary Science, Agri Sciences, and different branches of Engineering, Technology, Computer Science, Industrial Management, Business Administration and other Management Sciences.
- The loan applicant must be the student and parent/guardian jointly. It means if an NRI wants to avail the education loan to educate their nephew /niece or any other relative, the student and the supporting NRI can avail the loan jointly.
- All eligible students who have qualified the entrance examination of the specified institute and have got admission in the professional or technical courses.
- If you have been able to attain employment within six months of completion of course, the repayment of NRI education loan would begin immediately after you have completed one month at service from your date of joining.
- The general process of repayment is through monthly installments that last for a span of 60 months.
- You are required to clear off your debts within a stipulated span of 5-7 years once the repayment begins.
- In extreme cases this period can be extended by 2 years more at the max.
- When you opt for a loan which is less than Rs 4 Lac you do not have to keep anything as collateral security.
- A guarantee from Third Party is called for if you opt for a loan ranging from Rs 4 to Rs 7.5 Lacs.
- If you opt for a loan ranging from Rs 7.5 to Rs 20 Lac, you are required to keep a collateral security that would be in the form of LIC policy, Immovable property, RBI Bonds or any transferable government securities, Units of UTI or National Savings Certificate (NSC).
- Two copies of Passport size Photographs
- A copy of Passport of students, parent/guardian.
- Application form filled in by student as well as parent/guardian jointly.
- You are to provide the details of all the expenses that will be incurred for the course.
- A proof that shows your admission in the specified course.
- You may be asked to provide the references or testimonials of head of the institution or any other personnel reputed in the field who are not related to the person planning to pursue the course.
- You will be required to provide the proof of income of parent/guardian.
- Latest tax receipt.
- Valuation Certificate that would be issued by Bank's approved Valuator.
- Encumbrance certificate for last 15 years from sub registrar.
- Original and prior title deeds.
- Title Clear Certificate issued by bank's approved advocate.
- Possession certificate.
In the event of irregularities or default in repayment of the loan, a penalty of 1 percent to 2 percent (as the case may be) will be charged over and above the rate of interest that is being charged on the loan.
Points to Remember
- It is important to know if you have opted for any amount more than Rs 4 Lac as it will invite an additional margin of 5 percent. This margin is to be borne by you or your parents/ guardians.
- Your loan would be disbursed in stages according to the requirement of the institution where you have enrolled yourself and vendors of books etc.