The Hindu Business Line : Collateral-free loan up to Rs 7.50 lakh for students: IBA

THE norms under Education Loan Scheme have been simplified by the Indian Banks' Association to facilitate students get loans up to Rs 7.50 lakh without any collateral securities.

Reacting to the angry public reaction to the incident of suicide by a students for denial of education loan by a bank in Kerala, the IBA said it has advised its members to adopt the modifications in the scheme immediately so that the benefits can be passed on to students who wanted to take up higher education and professional courses in the current academic year.

According to the IBA, hitherto only loans up to Rs 4 lakh could be sanctioned without insisting on collateral securities and for loans exceeding this amount banks were taking tangible collaterals or third party guarantee covering 100 per cent of the loan amount. However, under the education loan scheme, banks are sanctioning loans up to Rs 7.50 lakh for studies in India and Rs 15 lakh for studies abroad. "This modification will enable a meritorious student to pursue higher education and professional course in any stream of his aptitude without having to provide collateral securities," the IBA has said.

In case of delay in disposal of loan application at bank branches, the IBA has appealed to parents to make use of the grievance redressal mechanism.

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