IBA loan scheme, higher upper limits on loans

The Indian Banks Association (IBA) has come up with an education loan scheme which will increase the borrower’s loan eligibility, though the lending process will become more stringent.

The maximum loan amount for studies in India is to be increased from Rs. 7.5 lakh to Rs. 10 lakh.

Rates of interest for education loans up to Rs. 4 lakh will not exceed the benchmark prime lending rate (BPLR) and for those above Rs. 4 lakh, it will not be more than 100 basis points over the BPLR.

The lending norms for loans for studying abroad have been made stricter. For loans between Rs 4 lakh to Rs 7.5 lakh, the parents will have to be co-borrowers to the loan, compulsorily. The upper limit of the loan amount for education abroad has been maintained at Rs. 20 lakh.

Some banks such as the State Bank of Hyderabad and the Union Bank of India are already offering special rates of interests for girl students availing educational loans.

Also, life insurance policies and mutual fund units can be treated as security for the loan. More than one child in the same family wishing to pursue education can avail of a loan. Courses like aeronautical engineering, commercial pilot training, and ship training have also been included in the list of courses eligible for study loans.