INDIAN BANKS' ASSOCIATION
MUMBAI
Central Scheme to provide interest Subsidy for the period of moratorium on Educational Loans taken by students from Economically Weaker Sections from scheduled banks under the Educational Loan Scheme of the lndian Banks' Association to pursue TechnicallProfessional Education studies in India.Introduction
One of the major concerns of the Government is to ensure that nobody is denied Professional education because he or she is poor. The lndian Banks' Association (IBA) had formulated a comprehensive model educational loan scheme for adoption by all Banks aimed at providing financial support from the banking system to deserving/meritorious students for pursuing higher education in lndia and abroad.
Obiective of the Scheme
The Government of lndia has now approved a scheme to provide full interest subsidy during the period of moratorium i.e., Course Period plus one year or six months after getting job, whichever is earlier, on loans taken by students belonging to Economically Weaker Sections from scheduled banks under the Educational Loan scheme of the lndian Banks' Association, for pursuing any of the approved courses of studies in technical and professional streams, from recognised institut~onsin lndia. The nomenclature of the Scheme would be " Central Scheme to provide Interest Subsidy (CSIS) for the period of moratorium on Educat~onal Loans taken by students from Economically Weaker Sections from scheduled banks under the Educational Loan Scheme of the lndian Banks' Association to pursue TechnicallProfessional Education studies in lndia".
Applicability of the Scheme
The Scheme wuld be adopted by all scheduled Banks and would be applicable only for studies in recognised Technical/Professional Courses in India. The interest subsidy shall be linked with the existing Educational Loan Scheme of IBA and restricted to students enrolled in recognised Technical / Professional Courses (after Class XII) in India in Educational lnstitutions established by Acts of Parliament, other lnstitutions recognised by the concerned Statutory Bodies, lndian Institutes of Management (IIMs) and other lnstitutions set up by the CentrallState Government.
lnterest Rates
The interest rates charged on the educational loan shall be as per the BPLR/Base Rate of the individual banks and as per the provisions for interest rates under the IBA Model Educational Loan Scheme.
Moratorium Period
Under the Central Scheme, the interest payable by the student belonging to EWS for availing of the Educational Loan for TechnicallProfessional Courses in lndia for the period of moratorium i.e., Course Period plus one year or six months after getting job, whichever is earlier, as prescribed under the Educational Loan Scheme for the Indian Banks' Association, shall be borne by the Government of lndia. After the period of moratorium is over, the interest on the outstanding loan amount shall be paid bv the student, in accordance with the provis~onso f the existing ~ducat ional~~oSachne me of Banks and as may be amended from time to time, whichever is earlier.
Income Limit/Proof
The benefits of the Scheme would be applicable to those student belonging to economically weaker sections, with an annual gross parentalfiamily income upper limit of Rs. 4.5 lacs per year (from all sources). Income proof shall be required from the students from such public authorities which are authorised by the State Governments for certification of income status for this Scheme, including Central and State Sector Schemes. The Dresent scheme is intended to cater-to the needs of students belonging to ewnomically weaker sections with prescribed upper parental gross income limit of the family from all sources, which is based on economic index and not on social background. The scheme is independent of any other schemes which may cater to EWS.
Competent Authority
The Ministry of HRD, Government of lndia shall issue an Advisory to all the State Governments requesting them to designate appropriate authority or authorities who are competent to issue income certificates, based on economic index and not social background, for the purpose of this scheme. The Banks shall implement the Scheme based on the notification of the certification authority by State Governments communicated through District Level Consultative Committees (DLCCs).
Eligibilitv for lnterest Subsidy
The interest subsidy under the Scheme shall be available to the eligible students only once, either for the first undergraduate degree course or the post graduate degreesldiplomas in lndia. Interest Subsidy shall, however, be admissible for integrated courses (graduate + post graduate). lnterest Subsidy under this Scheme shall not be available for those students once they discontinue the course midstream, or who are expelled from the Institutions on disciplinary or academic grounds. However, the interest subsidy will be available only if the discontinuation was due to medical grounds for which necessary documentation to the satisfaction of the Head of educational institution will have to be given.
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