
Educational Loan Scheme Introduction
Education is central to the Human Resources Development and
empowerment in any country. National and State level policies are framed to
ensure that this basic need of the population is met through appropriate public
and private sector initiatives. While government endeavour to provide primary
education to all on a universal basis, higher education is progressively moving
into the domain of private sector. With a gradual reduction in government
subsidies higher education is getting more and more costly and hence the need
for institutional funding in this area.
The scope of education has widened both in India and abroad
covering new courses in diversified areas. Development of human capital is a
national priority and it should be the endeavour of all that no deserving
student is denied opportunity to pursue higher education for want of financial
support. Loans for education should be seen as an investment for economic
development and prosperity. Knowledge and information would be the driving force
for economic growth in the coming years.
Based on recommendations made by a Study Group, IBA had
prepared a Model Educational Loan Scheme in the year 2001 which was advised to
banks for implementation by Reserve Bank of India vide circular
No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28, 2001 along with certain
modifications suggested by the Government of India. In line with the
announcement made by the Hon'ble Finance Minister in his Budget Speech for the
year 2004-05, IBA had communicated certain changes in the security norms
applicable to educational loans with limits above Rs.4 lakhs and up to Rs. 7.5
lakhs.
We have been receiving enquiries from members seeking
clarifications on the various provisions of the scheme based on feedback
received from the branches. With a view to ensure that the scheme is implemented
in letter and spirit, it was decided to review the scheme and make modifications
in the scheme to facilitate smooth operation at bank branches. Towards this, a
Working Group of General Managers drawn from select banks was constituted at IBA.
This revised model scheme has been prepared based on the suggestions made by the
Group.
2. OBJECTIVES OF THE SCHEME :
The Educational Loan Scheme outlined below aims at providing
financial support from the banking system to deserving/ meritorious students for
pursuing higher education in India and abroad. The main emphasis is that every
meritorious student though poor is provided with an opportunity to pursue
education with the financial support from the banking system with affordable
terms and conditions. No deserving student is denied an opportunity to pursue
higher education for want of financial support.
3. APPLICABILITY OF THE SCHEME:
The scheme detailed below could be adopted by all Commercial
Banks. The scheme provides broad guidelines to the banks for operationalising
the educational loan scheme and the implementing bank will have the discretion
to make changes suiting to the convenience of the students/ parents to make it
more customer friendly.