Documents Required education loan India

The following documents are required along with your loan application: Purpose Proof of identity Salaried Passport or Voter's ID card or driving license or PAN card or government department ID card Others Passport or Voter's ID card or driving license or PAN card

IT returns for the last 2 years Latest salary slip showing all deductions and computation of income Proof of income or Form 16 along with recent salary for the last 2 years certified by certificate a CA Bank account statement or Bank account statement or latest latest electricity bill or latest electricity bill or latest mobile or mobile or telephone bill or Proof of residence telephone bill or latest credit card latest credit card statement or statement or existing house lease existing house lease agreement agreement Bank statement or Pass Book where Last 6 months Last 6 months salary or income is credited Guarantor form Optional Optional Copy of admission letter of Copy of admission letter of the Institute the Institute along with Fees along with Fees schedule, mark sheets / Other Documents schedule, mark sheets / pass pass certificates of S.S.C, H.S.C , Degree certificates of S.S.C, H.S.C , courses Degree courses

Benefits Education Loan

Higher education within your reach

Axis Bank's Education Loan aims to provide the much needed financial support to deserving students for pursuing higher professional or technical education in India and abroad. The education loan would be provided to those students who have obtained admission to careeroriented courses e.g. medicine, engineering, management etc., either at the graduate or postgraduate level. We believe, given the right tools and aid every child has the potential to be successful. Our education loans aim to be the very tool that will enable them to reach their goals in life. No more

would a deserving student have to give away their pursuit of dreams due to lack of money. Our student loans will ensure that worthy students are empowered to take their destiny in to their own hands. Our endeavour is to help the future of our nation in education and prosperity.
Quantum of Loan

The quantum of finance under the scheme is capped at Rs 10.00 lacs for studies in India and Rs 20.00 lacs for studies abroad, which would cover tuition fees, hostel charges (if any), cost of books, etc. The minimum amount of education loan would be Rs 50,000.
Margin

No margin for education loans upto Rs 4 lacs. For loans above Rs 4 lacs, 5% margin for studies within India and 15% for higher studies overseas. Tax benefits:
If you have taken an education loan in order to support higher education for yourself, spouse, or children, then you should be aware of the tax benefits that you are entitled to. Following are the points that will help in knowing the tax benefits available on education loan. Tax benefits help reduce the cost of education and also lessen the pressure on savings that occur due to EMI payments. Deduction u/s 80 E Section 80 E provides deduction with respect to interest paid towards repayment of the education loan. There is no cap on the maximum amount that can be claimed as tax benefit u/s 80 E. This section is particularly beneficial for those who are in the higher tax bracket.

Since the deduction is available for the full interest cost; for those in the highest tax bracket i.e. in the 30% tax bracket, the effective cost will reduce by 30%. Applicable Conditions 1. Deduction is allowable only to the individual assesse and not HUF 2. There is no maximum cap on the interest amount that can be claimed for the deduction. However there is no tax benefit available on the repayment of principal. 3. Deduction is available if the interest has been paid for the same year i.e. previous year 4. Interest on loan taken from relatives and friends will not be eligible for deduction u/s 80 E 5. Loan should have been taken for pursuing higher education either for self, spouse, children or for those for whom the assesse is a legal guardian 6. Loan amount is not restricted to tuition fees and college fees but can also include other expenses like transportation, hostel charges etc. 7. Education can be pursued anywhere in the world and not is restricted to India Loan Structure Maximum amount of loan available for education in India is Rs. 10 Lacs and Rs. 20 Lacs for education abroad.

For loan upto Rs. 4 Lacs no margin money is required, however for loan above Rs. 4 Lacs, 5% margin money shall be applicable in case of education in India and 15% for education abroad. Margin money represents the partial allocation from the borrowers side with respect to the tranche due. For example for fee due of Rs. 1 Lac if the margin money is 5% then the borrower/his family will be required to pay Rs. 5,000 and remainder 95% will be borne by the bank/lender. Different banks/lenders have various clauses and conditions when it comes to providing security towards the loan borrowed. However following is a typical example.

Loan repayment starts after 6 months of getting a job or one year of completion of education which ever is earlier. Simple interest is levied during the education and moratorium period. post which compounding interest is levied on the outstanding loan amount. Documents Required

Loan application on Bank's format Passport size photograph Proof of Address Proof of Age Proof of having cleared last qualifying examination Letter of admission in professional, technical or vocational courses Prospectus of the course wherein charges like Admission Fee, Examination Fee, Hostel Charges etc. are mentioned Details of Assets & Liabilities of parents/co-obligants/guarantors In case loan is to be collaterally secured by mortgage of IP, Copy of Title Deed, Valuation Certificate and Non Encumbrance Certificate from approved Lawyer of the Bank to be obtained at the cost of the borrower Photocopy of Passport & Visa, in case of study abroad Copy of PAN of student Borrower (If PAN is not available at the time of sanction, the same be obtained within one year of disbursement of loan).

The above list is only for illustration; specific requirements can change on a case to case basis i.e. additional documents might be required and based on the practices followed by the lender.

These days education comes with a cost and higher education seems to be proving costlier day by day. The question haunting most of the deserving students, whose parents / guardians are not rich enough, is with respect to any available financing options. To support such students so that they may not left behind from the main league of education, the government of India has formulated Educational Loan Scheme. Two banking and financial Apex Bodies, the Reserve Bank of India (RBI) and Indian Bankers Association (IBA) have helped the government in preparing the plan and procedure for educational loans. The new scheme covers all types of courses including professional courses in schools and colleges in India and abroad.

Some of the key-features of educational loan scheme are mentioned below

The scheme provides loans up to Rs. 10 lakh for studies in India and up to Rs. 20 lakh for studies abroad.

For loans up to Rs. 4 lakh no security or margin is necessary and the interest rate is not to exceed the Prime Lending Rates (PLR). For loans above Rs. 4 lakh the interest rate will not exceed PLR plus 1 percent. The loans are to be paid back over a period of 5 to 7 years; there is provision of grace period of 1 year after completion of studies. Tax Benefit- The repayment of an educational loan is deductible under section 80E of the Income Tax Act. The annual limit for deduction is Rs. 40,000 (for both the principal and the interest). Only loans borrowed for higher education ( full time studies in any graduate or post-graduate, professional, and pure and applied science courses) may claim deduction. The deduction will be available for a maximum of eight years starting from the day you start paying back.

Loan Feature
Loan Amount Interest Rate Loans upto Rs.15 Lakhs for Education in India and upto Rs.20 Lakhs for Education abroad Information not available Repayment to start 1 year after course completion / 6 months after obtaining employment (whichever is earlier). Loan available upto tenure of 7 years including moratorium period

Tenure

Pre Payment Charges Service Charges

Upto 4% of the Principal Outstanding after 6 months of repayment

Processing Fee: Upto a maximum 2% of the loan amount

Eligibility Criteria : Education Loan

Salaried

Self

Age Income Job Experience Residence Proof

16 - 35 yrs Income Criteria Not Available Information not available Valid Residence proof

16 - 35 yrs Income Criteria Not Available Information not available Valid Residence proof

Docs Required : Education Loan

Salaried

Self

ID Proof

Co-Applicants Passport Copy/ Voters ID card/ Driving Licence/Copy of PAN Card/Other valid ID Passport/Voters ID/Driving License/Latest Electricity bill/Latest Landline Telephone Bill/Any other Valid Address proof Birth Certificate

Co-Applicants Passport Copy/ Voters ID card/ Driving Licence/Copy of PAN Card/Other valid ID Passport/Voters ID/Driving License/Latest Electricity bill/Latest Landline Telephone Bill/Any other Valid Address proof Birth Certificate
Co-Applicant Self Employed (Professionals) :

Address Proof

DOB Proof

Self Employed : Last 2 Year ITR with Computation of Income Last 2 Years Audited Balance Sheet Last 6 Months Bank Statement Proof of Turnover (Latest Sales / Service Tax Return) Self Employed - Professional : Last 2 Year ITR with Computation of Income
Co-Applicant Salaried Individual:

Financial Docs

Latest 6 Months Bank Statement of the Salary Account Latest 2 Salary Slips carrying date of joining details

Last 2 Years Audited Balance Sheet / P& L Last 6 Months Bank Statement Proof of Qualification
Self Employed :

Last 2 Year ITR with Computation of Income Last 2 Years Audited Balance Sheet Last 6 Months Bank Statement Proof of Turnover (Latest Sales / Service Tax Return)

Self Employed - Professional :

Last 2 Year ITR with Computation of Income Last 2 Years Audited Balance Sheet / P& L

Last 6 Months Bank Statement Proof of Qualification

Other Charges : Education Loan

Description of Charges

Amount of Charges
Nil Not applicable @ 24 % p.a. on amount outstanding from date of default Not applicable Not applicable Upto Rs. 500/- per event Upto Rs. 1000/Upto Rs. 450/- per Bouncing
As per applicable laws of the state

No Due Certificate / No Objection Certificate (NOC) Solvency Certificate Charges for late payment of EMI Credit assessment charges Non standard repayment charges Cheque swapping charges Loan cancellation / re-booking charges / Re-scheduling Bounce Cheque Charges
Stamp Duty and other atatutory charges

Legal / incidental charges

At actual

Documents Required
Documents from Student

* Completely filled Application Form with Photographs. * Letter of admission from the Institute. * Cost break up of the program from the Institution stating the Tuition fees- term-wise, year-wise and any other expenses. * Students entire academic record in the form of marksheets starting from class X to the last qualifying exam cleared. * Declaration/Affidavit confirming that no loan has been availed from other Bank/Institution. * Address Proof: Passport, Driving license, Ration Card, Voter's ID Card, Bank statement. * ID Proof: Photo Pan Card, Passport, Driving License or Voter's ID card. * Signature Proof: Bank Signature Verification, Photo Pan Card, Passport, Driving License or Voter's ID card. * Age proof: Bitrth Certificate or 10th Class passing Certificate. Documents for Studies Abroad - In addition to the above list of documents: * Letter from the Head Of Department of the University. * Visa approval papers. * Travel papers. * GMAT/GRE/SAT score. * I-20 in case of applicant going to the USA. * Progress reports in the form of mark sheets or a letter from the Institute, while processing the fresh disbursement tranch. Documents for Co-Applicant if Salaried:

* ID Proof: Photo Pan Card, Passport, Driving License or Voter's ID card. * Address Proof: Ration card Telephone or electricity/water Bill, Rental agreement, Passport copy. * Bank Statements for last 3 months. * Latest salary slip or current dated salary certificate with latest Form 16

Documents for Co-Applicant if Self employed (Professionals/Individual ) : * ID Proof: Photo Pan Card, Passport, Driving License or Voter's ID card. * Address Proof: Ration card Telephone or electricity/water Bill, Rental agreement, Passport,Trade licence /Establishment/Sales Tax certificate.

Bank

Statements

for

last

months.

* Latest ITR along with computation of income, B/S & P&L a/c for the last 2 yrs. certified by a CA. *Qualification proof of the highest professional degree. *Proof of continuation of business :Trade licence /Establishment /Sales Tax certificate. *Sole Propieter Declaration Or Certified Copy of Partnership Deed, Certified Copy of MOA, AOA & Board resolution. Documents Required Post Loan Sanction:

* Education Loan Agreement. * SI/ECS Mandate as applicable. * Post Dated Security Cheques as per Bank Policy.

What are the interest rates for educational loans and how are they calculated? -2008/03/05

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The interest rates vary significantly from bank to bank. It is usually determined on certain slabs. For instance, for loans up to Rs. 25,000, the rate of interest would be 12 per cent, for Rs 25,001 to Rs 2 lakhs, 14 per cent, and for loans greater than Rs 2 lakhs, it would be 16 per cent. The interest rates could be fixed or variable. A fixed interest rate means that the rate of interest for the entire tenure of the loan would remain the same, whereas a variable interest rate, which depends on the Prime Lending Rate (PLR) set by the Reserve Bank of India, keeps changing half-yearly or yearly. Usually, nationalized banks follow variable interest rates, while private and foreign banks follow fixed interest rates. It is advisable to opt for variable interest rates because it has been seen, over the years, that the PLR has been dropping, and hence the interest rates applicable on the loan amount would drop correspondingly. The interest on the educational loan taken by a student starts immediately after the day of disbursal. The interest is payable on a quarterly reducing basis, calculated on a simple interest basis. But once the repayment of the actual principal starts, the interest is calculated on a compounded basis.
Mumbai, Sept 21: challenges

The Finance Ministry has asked public sector banks to put in place a three-tier grievance redressal mechanism to sort out problems being faced by students in obtaining education loans. Banks have also been asked to make education loan applicants aware of the mechanism at the branch, zonal office and head-office levels at the time of submission of loan application. Besides, the ministry wants banks to introduce a system of review by the next higher authority where application for education loan is rejected. These directives come in the wake of the Finance Ministers observation that students wanting to get education loans were facing a number of problems.

Problem areas

The problems being faced by students include bank managers insisting on service area approach (SAA) in Kerala and Tamil Nadu; and refusing loan to management quota candidates and to students pursuing B.Sc (Nursing) in Kerala. Further, at times, managers reject education loan applications without any valid reasons. A bank-wide committee headed by T. M. Bhasin, Chairman and Managing Director, Indian Bank, has decided to write to the lead banks in Kerala (Canara Bank) and Tamil Nadu (Indian Overseas Bank) to ensure that bank branches do not reject any education loan application merely because a village has been allocated to another bank branch.
Merit-based selection

The committee is of the view that a student who qualifies on the basis of merit but chooses to pursue a course under management quota for reasons of proximity or choice of discipline deserved to be reckoned as a meritorious student. For assessment of limits in such cases, it has been decided to consider the fee fixed by the State Government or a Government-approved regulatory body for admission to payment seats under the common admission process. Keeping this in view, the eligibility criteria would be suitably modified in the Indian Banks Associations model education loan scheme.
Nursing courses

In the case of nursing courses, the committee is of the view that regular degree/diploma courses approved by the Indian Nursing Council may be considered for loans by banks.
Banks feedback

Banks have given feedback to the Ministry that they have put in place systems and procedures to bring to the notice of the student community about the procedure for getting education loan. They have also provided details of the officials to be contacted for any queries/complaints in regard to the loan. Further, most of the banks are providing online facility for submission/sanction of loans which will reduce complaints to a great extent. [email protected]
(This article was published on September 21, 2012)

Keywords: public sector banks, grievance redressal mechanism, education loan problems, service area approach, management quota candidates, meritorious students, sanction of loans

Around 24 lakh students took loans for education with banks having an outstanding amount of Rs 52,000 crore, Union Finance Minister P Chidambaram said today, as he asked banks to lend more money for this purpose. Chidambaram also asserted that his ministry was committed to the education loan programme of the banks. "24 lakh students in India have borrowed loan for education and the outstanding amount with the banks is to the tune of Rs 52,000 crore," he said. Chidambaram was speaking at a function after formally inaugurating the Indian School of Business (ISB) campus here. The banks had Rs 27,000 crore outstanding on education loans as of March 2009, Rs 35,850 crore as of March 2010 and Rs 41,340 crore such loans as of March 2011, as per the data from the Reserve Bank. Urging the young talent to contribute in building India, Chidambaram asked those who have spent some years abroad to return and help meet challenges faced by their own country. "After 11, 12 months your (students) temptation is to migrate to USA or elsewhere in the world...It is a legitimate desire...Indian human resources will find opportunities all over the world...Seize these opprtunities...Spend few years...But please remember that there is no other place in the world which can challenge you (students) like India." "Spend a few years wherever you feel whether in USA, Europe, Latin America, East Asia or Africa, but please remember it is only India and no other place that can challenge you (students)," he said. He asked the young talent to ask themselves a few questions as to in which other country of the world does one need to add 1,00,000 MW of power, construct thousands of kms of roads, bring drinking water and sanitation to over 700 million of people. "The greatest challenge is to build India," he said referring to the brain drain. "At some stage or the other return back and help build India...Challenge is not only in business but elsewhere too," he said. He also expressed concern over "limited world class institutions" in the country. "We have one institution of world class in Science, a couple in engineering and technology, one in Mathematics and one in international studies," he said, adding that the country need to build world class institutions.

Getting Education Loans from banks is not that easy now. As the bad loans in education loans category increasing, banks have become cautious on sanctioning fresh loans to the sector. Though, there was an implied obligation on public sector banks to disburse the education loans as per the targets, banks facing lot of delinquency pressure due to growing defaulters in this segment. This situation is leading in to trouble for many financially backward meritorious students, who were aspiring higher education by getting student loans from banks. As every body knows, merit students can avail education loans from banks up to four lakh rupees without any collateral security for domestic institutions. Primarily the students loans from banks will be for paying tuition fee only. Other expenses like books, hostel fee are not covered under education loan. For overseas education, the rules are slightly different, which we can discuss separately. As the engineering and other professional colleges admission are over, many students are looking for financial aid. Education loans from banks are the best option for right candidate. But as said earlier, the big challenge is to convince the bank manager to accept your loan application. Basically, loans are depends on the manager-customer relationship rather than talking about rulebook. If you want to get an education loan from any bank, first you check your relation ship how best is with your bank manager.

There are various steps in planning a good career:advice 1. If you can afford to use the services of a career guidance center, you should do so, and use the opportunity of getting expert counseling when you are still in secondary school. Even going otherwise is highly recommended. Career counselors evaluate you on a personal basis, using different scientific tools, before coming to a conclusion. Hence, go to a career-counseling center is always a fruitful exercise. 2. You need to develop a good career plan. You should think about the kind of training, education and skills that you will need to achieve your career goals. 3. Assess your skills and interests. You need to be sure about what you will truly enjoy doing, what are you good at, what your personality type is, and what values you hold. 4. You need to research areas of occupation. You need to find out about the nature of the jobs that interest you, such as defense, manufacturing, management, etc. Find out more about the job profiles, salaries and their trends, potential, and anything else that can help them narrow down the focus. 5. Then you need to compare your skills and interests with the occupation that you have selected. You should then go for a job or career that matches, or is very close to, your skills, interests and personality. 6. After you have chosen the occupation, it is time to formulate a career goal. You need to develop a plan to reach that goal. 7. Then you need to select a few colleges that will offer you the required degree or training program that best meets your goal and financial needs.

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Developing a Career Plan

With so many possibilities available, how does one make a wise decision? Once you know the career path you want to follow, how do you get there? These are some of the questions that your career plan should answer. Here are some tips that will help students and parents to develop a career plan:

1. To find a satisfying career, develop career plans in line with your interests, skills and personality. Pen down your interests and each of the things that you have enjoyed during the course of your life, like social work, accounting, volunteering, teaching, assisting parents in their businesses, part-time work or any other project that you might have undertaken. Extensively evaluate your likes and dislikes. Write down what you liked, what was more challenging in that particular activity, and ultimately what you learnt from it. Can you make that your long-term career? Make a list of such activities that you have undertaken in the last couple of years. 2. Draw a list of skills that you possess and would like to develop to the fullest extent possible. Your skills may include training, vocational courses, hobbies, etc. that you might have undertaken over the years, and are really good at. Compare your skills with interests. Are there any activities common to both the lists? If yes, find out if any of those can be converted into a professional career. For example, if you took tuitions and enjoyed teaching, then you should probably think of a career in the educational field, as a teacher or a professor. 3. Find out the various types of career options available to you. Research careers, as more often than not, you may not know the best occupations that may fit your skills and interests. It is very important to actually find out whether the career you are considering is really what you expect it to be, and whether it offers the long-term prospects, salary and other benefits that you expect. The best way to find about all these is to talk to people around you. Call up people in the industry, take appointments, meet them personally and seek their advice. 4. Once you have decided about the career that you want to be in, then the next step is to decide how to get there. Ask yourself: What special training do I require? Which school, college or institute do I need to join? All these questions need to be answered properly. List the top colleges you would like to attend, and start preparing for their entrarends. Once you choose a career, think again, and talk to senior and experienced people how to accomplish those goals.

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How will a career goal help me?

A career goal will help you focus on what you want to do for a living. This could be a very specific job that you would like to do, e.g. being a doctor or a management consultant, or it could be a particular field of interest, such as medicine or general management. Rather than limiting your future, a career goal will help you to discover possibilities that you would not have thought of otherwise. There are several job possibilities for any chosen career. For example, if you opt for advertising, you may have options like client servicing, media planning, business development, choreography, computer animation and graphics, production and directions, copywriting, etc. A career goal will guide you in what to do in life, taking care of your interests, skills, personality and job trends. Once you choose a career, think again, and talk to senior and experienced people how to accomplish those goals.

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What are the steps needed to select a school/college/institution?

The following are some of the steps that will help you choose better: 1. Clearly establish your goals and interests. 2. If you are clear about the career you want to get in, find out what kind of education or training is required to excel in that field. 3. You need to find out about various schools/colleges/institutes conducting those courses, and important factors like faculty, location, course offering, facilities, distance from home, religious affiliation, area of study, campus environment, social activities, etc. 4. Rank the above characteristics according to your preferences and choices. 5. Make sure about the qualifying admission criteria for the required college/institute, and find out more about the entrance and other exams that you may have to pass to secure admission. Lots of books are available in the market that provides you the institutes' past question papers, to help you master their pattern and style. Prepare well before you appear for the exams. 6. Gather information about the schools from various sources like the Internet, friends or by talking to industry people. 7. Request information from the college/institute about their admission dates, fees and other related matter. 8. Apply on time to avoid later confusion and hassles. Try to keep a photocopy of all forms sent to various colleges/institutes. 9. Apply to the top half a dozen colleges, in order to avoid disappointment.

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How do I plan for the cost of my studies?

1. Firstly, you need to find out as much information as possible about the college/institute that you plan to get into. Buy their prospectuses, and get details of fee structure and other related costs. 2. If the college/institute is not in your hometown, check for hostel accommodation and mess facility, etc., as, ultimately, these costs will also be borne by you. 3. You can look out for scholarships and grants. Finding them in the Internet age has become really easy. So do not forget to check for scholarship and grants on the Internet before you decide on the loan

amount. There are a lot of companies and trusts that give scholarships and grants to deserving students. 4. Check with the college/institute about any financial loan facility and the procedure for availing it. Usually, in such schemes, you are given a fixed period to pay your fees. 5. Enquire with the institute if it has any tie-ups with banks or whether it assists students in applying for educational loans. Most of the reputed colleges/institutes have a tie-up with certain banks for educational loans. The main criterion for these banks is confirmed admission. Hence, checking this out could be worthwhile. 6. Check with different banks, well before the results are announced, whether they finance the course that you are interested in, and find out other things like interest rates, loan amount, margin, documentation, etc. Most importantly, you need to find out the processing time that the bank requires sanctioning the required loan amount. This is important, as you have a fixed number of days to claim your admission. 7. So shortlist a few banks, and keep the documentation ready. 8. One thing that has to be kept in mind is insurance. In India, banks usually require a student to have his/her life insured for at least an amount equivalent to the loan amount. Hence, do not forget to take out a policy before applying for a loan. 9. Now you need to see how much you or your family can afford, or is willing, to pay for your education. It is advisable that you take a loan only for the amount that is really required, and not for the entire cost of your education. Hence, the issue should be discussed with your family members. 10. After filling out the bank loan forms, it would be advisable to photocopy them, fill up the photocopies, show them to the bank and get approval, before filling out the final forms. This will help you avoid cancellations or corrections that may unnecessarily delay the loan sanction period.

EDUCATION LOAN BY BANKS

Allahabad Bank AXIS BANK Bank of India Canara Bank

Andhra Bank Bank of Baroda Bank of Maharashtra Catholic Syrian Bank

Central Bank of India City Union Bank Ltd. Dena Bank HDFC Bank ICICI Bank Indian Bank Karnataka bank Karur Vysya Bank Punjab & Sind Bank SBI Commercial and International Bank Ltd. State Bank of Bikaner and Jaipur State Bank of India State Bank of Patiala Syndicate Bank THE HP State Co-operative Bank Ltd. The Ratnakar Bank Ltd. The Surat Peoples Cooperative bank

Centurion Bank of Punjab Corporation Bank Federal Bank HSBC Bank IDBI Bank Indian Overseas Bank Karnataka State Cooperative Apex Bank Ltd Oriental Bank of Commerce Punjab National Bank South Indian Bank State Bank of Hyderabad State Bank of Mysore State Bank of Travancore Tamilnad Mercantile Bank Ltd The Lakshmi Vilas Bank Limited The Saraswat Coop Bank Ltd The Tamil Nadu State Apex Co-operative Bank Ltd

UCO bank United Bank of India

Union Bank of India Vijaya Bank

Increase education loan lending: Nair Committee recommendations

Banks are concerned as non-performing assets in education loans are as high as 6%. Meanwhile, SBI, largest public sector lender, announced an interest rates cut on education loans up to 1%
The committee constituted by the Reserve Bank of India (RBI) to re-examine the existing classification and suggest revised guidelines for the lending to the priority sector, has recommended an increase in lending limit for education loan by Rs5 lakh. The committee headed by MV Nair, chairman, Union Bank of India, in a report suggested to that limit under priority sector for loans for studies in India may be increased to Rs15 lakh and Rs25 lakh in case of studies abroad, from existing limit of Rs10 lakh and Rs20 lakh, respectively. The RBI has sought comments on the report of the Committee. Redefining the scope of education loans by removing the limits and fixing it on the basis of parents income, covering vocational and skill development under its ambit and establishing a credit fund to cover the risk of defaults were some of the suggestions received by the committee. There is no suggestion on the lending up to Rs4 lakh, given without any security or collateral. Experts say that this category also has highest number of repayment defaults. Non-performing assets (NPAs) in education loans are as high as 6%. To bring down NPAs in education loans, the government is considering the option of setting up a credit guarantee trust. Last year, the Indian Banks Association (IBA), which has formulated the model education loan policy, had recommended of creating a credit guarantee fund to tackle the problem of rising defaults in the loan category of up to Rs4 lakh. The committee has said that it is under consideration. Recently, IBA asked lenders to impose stricter terms on loans given to students getting admission under the management quota. Any loan considered by banks for students getting admission under the management quota would be outside the model scheme. Banks may fix appropriate terms and conditions for such loans, IBA said in a guidance note. Experts, say that there is need to address the issue of lending to students under management quota as it might impact large number of students opting admission through this route. According to Prashant Bhonsale, country head of Credila Financial Services, a private lender specializing in education loans, Though the move is in the right direction considering the risk factors from the point of view of the lender, there is a need for risk-management framework for lending to these average students. An official of Mumbai-based public sector bank, which has seen 16%-17% growth in the education loan portfolio, confirmed that, It is left to each bank to decide on the lending to students under the management quota. It wont come under the IBA policy. We are looking into it. I cannot commit anything right now. According to the current guidelines, banks lend up to Rs4 lakh without any security. But for loans between Rs4 lakh and Rs7.5 lakh, they can ask for personal guarantees, and for a loan above Rs7.5 lakh, a collateral is required. After the apex bank eased its monetary policy, State Bank of India, largest public sector lender, announced an interest rates cut on education loans up to 1%.