As part of the Interim Budget, India’s Finance Minister P Chidambaram announced that the Govt. will take over the liability of outstanding interest as of Dec ’13, but borrowers will have to pay interest after Jan 1, ’14
As on March 31, 2009, the number of outstanding accounts was 15.8 lakh and the total education loans outstanding was Rs 26,912.73 crore. The NPA was 2.22 per cent for loan size up to Rs 4 lakh and 1.18 per cent for loan amount higher than Rs 4 lakh. The total NPA for education loans outstanding as on March 31, 2009 was 1.87 per cent.
The CSIS for education loans was introduced by Pranab Mukherjee, who was the finance minister during 2009-10 in respect of education loans disbursed after April 1, 2009, under which the government took over the burden of interest for the duration of the period of study and a little beyond.
Repayment tenure for education loans varies from bank to bank, but is generally seven to 10 years, excluding moratorium period. The moratorium period refers to repayment holiday during the course tenure.
Oneyearmba.co.in view – While the interest subsidy comes as a relief to lakhs of students, one can’t help but sympathize with the many, who despite the bad economic environment, have paid their dues diligently by cutting corners in their domestic and personal expenses. Shouldn’t these people benefit too from this step? Otherwise, the Finance Minister’s move seems to encourage defaulting on education loans and sends out a wrong message to people trying their best to stay on the right side of the law.
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I have education loan of Rs.3 lakh from Dena bank. After the announcement of the scheme in the budget, i contacted my bank and to my surprise they denied saying that the entire announcement is just a " Vote bank politics" and is "Lollypop" that has nothing to do with the reality. He asked me to pay the amount with the interest. I am in a fix. My repayment period starts in next 15 days and I m still not clear if I have to pay the Interest or not? How can I get the further clarification on this? Please help.
Hi Vikas,
The Government is yet to announce the details of the policy so it's not clear how the provision is going to be implemented. It might be helpful to write to your bank with you concerns and take their advice on mail on how to approach your loan repayment.
i have availed a edu loan in indian bank,i want to repay that.When the announcement will be implement.what will be the minimum and maximum days.pls suggest.
:D :)
Even though it is a boon for the students who have availed the loan, in other words it is encouraging the students who were irregular in the payment. students who struggled hard to make the payment also mus tbe benefitted. As you said"While the interest subsidy comes as a relief to lakhs of students, one can’t help but sympathize with the many, who despite the bad economic environment, have paid their dues diligently by cutting corners in their domestic and personal expenses. Shouldn’t these people benefit too from this step? Otherwise, the Finance Minister’s move seems to encourage defaulting on education loans and sends out a wrong message to people trying their best to stay on the right side of the law. "
Finance minister must amend it or clarify that the interest scheduled for the moratorium period must be waived irrespective of whether the amount is paid or outstanding and adjusted in the principal as he has clearly mentioned it as " moratorium period and outstanding as on 31st Dec 2013. ". This is beneficial for the entire student community who have availed the loans
I have an education loan of 1.8 lakhs INR taken from SBT in 2007. The interest for the study period has come to 1.4 lakhs INR. My repayment date starts in a few days. Does the latest announcements mean that the interest for the period till dec 2013 is waived off?
Hi Nadiya, the announcement has been made, but banks are confused as it seems a concrete plan on how the scheme is to be implemented has not been released by the government. We would advise you not to assume anything as a misstep here it could have a impact on your CIBIL score (creditworthiness). It its best to write to your bank and get their guidance on this.
hello sir,
I took loan in 2008 from dena bank. after this scheme also we have to pay the instalment or not because i am not able to pay this but bank manager is forcing me and my family to pay.
Sir please let me know when this scheme will be impliment.
Hi Vivek, unfortunately no one knows. We advise you to play safe, and either continue with old terms or get the new terms in writing from your bank before changing your payment strategy.
Dear all, I had availed Rs. 85,000 as education loan from SBI bank, Mandya, Karnataka, during the year 2005. I have been paying interest and paid a total interest of Rs. 40,000 +, till date. But this repayment is not on regular basis. Whenever I get money I have paid. But recently, bank people called me and forced me to clear all the outstanding. But, I said, I can't repay the full amount which is 1.25 Lakh. So, paid only 10,000 last month after they call me. But, recently, bank has approached the court and complained that, I have not met them since I have taken loan and I have not paid any amount. (Even though I have paid RS 40,000 till date) and the court has issued me summons to report to the court. I dont know, what to do? I am lecturer in position and feeling very shy to attend the court. Please somebody help me and guide me to resolve this issue.
Hi H,
Sorry to hear about your situation. While your query extends beyond the purview of the discussion at hand, we would recommend that you first share the scans of your loan account statement reflecting the EMI payments made by you with the bank. If the bank does not withdraw the case in light of the proof provided by you, it seems you have no option but to engage a lawyer and approach the court with the proof of payments. That said, we would recommend that you consult a lawyer to understand the legal options available to you.
Regards.
hi
i have taken edu loan 2.5 Lks in 2007, central bank of india.Now the interest is 1.75lks. hardly i am paying 5000 - 8000 Rs every month since 08/2013. the have not given me any EMI details. its becoming burden to me bcs i am working in very small company.i want to know whether interest will waived off or not.if it will, how much time it will take.
Hi Sasa,
The details of this scheme have not been announced by the government yet. In absence of details from the government, different banks are responding differently to the announcement. We would recommend that you get in touch with your bank with your query for the best way to resolve the situation.
Excellent move. Will help students.
Hi,
i have taken education loan 4 Lks in canara bank in 2009,now it become 6Lks, After 2 years i got job in one company.I was separated with my parents due to some personal issue and their annul income is Cross the 4.5Lks,whether am eligible to take interest waived off or not.Is their any way to take ,if it will, how much time it will take.Please somebody help me and guide me to resolve this issue.
Hi Manushree,
We would recommend getting in touch with your bank on this issue. The last governments announcement has not been followed up with guidelines on how the loan waiver will work. Its best to have a written correspondence with your bank to get their perspective and to avoid a problem later.
Regards.
i have taken edu loan 1.3 Lks in 2007, Indian bank Now the interest is 1.85lks. hardly i am paying 7000 – 8000 Rs every month since 02/2014. the have not given me any against loan waived details. its becoming burden to me i am working in company very low pay .i want to know whether interest will waived off or not.if it will, how much time it will take& how approch the bank with valied information or GO passed aganst the waived off interest .
Hi Kar,
The current economic environment has hit everyone hard.
Unfortunately, the govt. is yet to release concrete plans on how the loan subsidy will work. You can read about this here:
http://www.oneyearmba.co.in/no-clarity-on-interest-cancelled-interest-waiver-on-education-loans-in-india/
We would advise you to work with your bank and get their advise on the waiver. If there is no waiver, they may
be able to lower your EMI by increasing the tenure of your loan.
all the best!
hi,
i have taken loan 96 thousand in 2007. they give me a amount 46000 IN second YEAR
OF my study, another 46000 they given 3rd year AFTER my study completion. i have paid partially 40000 FOR up to 2013
.i have received letter FROM bank regarding the waiver AND i have give the DOCUMENT LIKE PAN card parents income CERTIFICATE
AND getting letter form lawyer.
the government has takeover the interest OR NOT? IF they taken that 40000 paid amount will reduce FROM the
original amount? please give me SOME information?
Hi Siva,
Unfortunately students have been left high and dry as the government has not bothered to clarify on this pre-poll promise. Read this for more: http://www.oneyearmba.co.in/no-clarity-on-interest-cancelled-interest-waiver-on-education-loans-in-india/