The Reserve Bank of India (RBI) is the country’s main central bank. RBI for regulates all the banks and NBFCs in India. RBI also controls the money supply in our country. It also looks after the credit regulations in the country and often issues loan guidelines, be it personal or education loans. It is vital that you know all about the RBI guidelines for education loans in 2024. Consider this blog as your handy guide. Here we go!
| RBI Guidelines For Education Loans 2024 Overview | |
| RBI Guidelines For Education Loans | -Online application process -Interest rates based on repo rates or loan margins to reduce financial burden -Loan repayment flexibility through extended moratorium periods of 1 year. |
| RBI Guidelines For Unsecured and Secured Loans | -Secured loans will be given at lower interest rates ranging 8-11%. -Unsecured loans will be given at higher interest rates ranging 10-15% |
| RBI Education Loan Interest Rates Rules | Tax rebate under section 80E on total interest paid. Interest subsidy schemes like CSIS scheme and Dr. Ambedkar central subsidy scheme. |
| Grievance Resolution | Ombudsman Scheme of RBI for lodging complaints against lenders. |
Latest RBI Guidelines For Education Loan 2024
The Reserve Bank of India keeps updating its rules for the smooth education loan system in India. Keeping education as a priority, RBI always encourages banks to keep it simple without putting any restrictions or financial burden on students regarding education loans abroad and in India. Let’s look at the list of the latest RBI guidelines for education loans:
Simple Application Process
The RBI has instructed banks to make the application process and loan approvals quick and straightforward. This is why banks provide clear information about terms and conditions, eligibility criteria, and documents. Also, almost all banks have started an online application process to help students get loans with a few clicks.
Interest Rate Regulations
According to RBI, banks must charge an interest rate based on loan margins of 7.75 in September 2022, or the interest rate must be according to the repo rate announced by the RBI. This method ensures students are not burdened with huge interest charges, making education loans more affordable.
Repayment Flexibility
You might have noticed how banks provide students a moratorium and a grace period. Well, all thanks to the RBI. All banks offer a course period + 6 to 12 months of grace before the loan repayment begins. This helps students secure a job and become independent to pay the EMIs.
Extended Repayment Tenure
Before this, the student loan repayment period was only 5-7 years. But now, as RBI has come up with its new guidelines, the student loan repayment tenure is stretched to 10–15 years. Banks also provide a schedule for better financial planning for students.
Education Loan Guidelines By RBI For Secured & UnSecured Education Loans
Thinking about students from different financial backgrounds, RBI came up with secured and unsecured student loans so that everyone could get money to fund their education. Given below is a table that shows the difference between secured and unsecured student loan RBI guidelines:
| Parameters | Secured Loans | Unsecured Loans |
| Collateral Requirement | An immovable property, gold, asset, fixed deposit, government bonds, etc. is required as a collateral according to RBI. | Banks are authorised to give loans without collateral as per RBI guidelines. |
| Loan Amount | Loan amount can vary from INR 10 lakhs to 1.5 crores | The loan amounts range from INR 4 lakhs to 60 lakhs |
| Interest Rates | Lower interest rates ranging from 8 to 11% | Higher interest rates ranging 10-15% |
| Eligibility Criteria | Because collateral reduces the lender’s risk, secured loans are more accessible to borrowers with bad credit scores. | Banks look at a borrower’s academic performance, admission to recognised institutions, etc. |
RBI Guidelines For Education Loan 2024 Rules For Interest Rates
RBI also offers a tax benefit under section 80E for student loans. Education loan interest is deducted from taxable income under this section. A loan benefit like this is also offered to encourage borrowers to take out educational loans. RBI also guided banks in providing interest subsidies on student loatheet’s look into these schemes given below:
Central Sector Interest Subsidy Scheme (CSIS)
Below are the features of the Central Sector Interest Subsidy Scheme on education loans. Make sure you go through them thoroughly:
- Beneficiaries: The scheme is for the country’s economically weaker sections (EWS), and families whose annually earn INR 4.5 Lakhs.
- CSIS Coverage: For education loans taken out through IBA’s Model interest subsidies of up to 10 lakhs are given.
- Course Eligibility: Students studying technical or professional courses in India can apply for the CSIS scheme.
- No Collateral Security Required: These interest subsidies don’t require collateral or guarantees.
Dr. Ambedkar Central Sector Scheme Of Interest Subsidy For Education Loans
Take a look at the following features of the Dr Ambedkar Central Sector Scheme of interest subsidy on education loans:
- Beneficiaries: Minority classes (OBCs) and economically backward classes (EBCs) with an annual gross family income between 5 and 8 lakhs.
- Dr. Ambedkar Central Sector Scheme Coverage: It covers the course duration and another 12 months after completion. A maximum of Rs. 20 lakhs of the loan amount is eligible for interest subsidy.
- Course Eligibility: For students who have completed Class XII and are enrolled in professional or technical courses recognised by NAAC, NBA, Institutions of National Importance, or Central Funded Technical Institutions.
- No Collateral Security Required: These interest subsidies don’t require collateral security or guarantees.
Resolution of Grievances
If you’re not satisfied with your bank’s services or the bank doesn’t resolve your complaint within 30 days, you can complain to the RBI Ombudsman Scheme. Complaints can be filed online through RBI’s Complaint Management System, or in person.
FAQs
Q1. What are the RBI guidelines for education loan 2024?
Recent RBI guidelines have made the application process easier, regulate interest rates based on MCLR or RLLR, and offer easy repayment schedules.
Q2. What is the maximum limit for an education loan?
The maximum loan amount you can take can range between INR 10 Lakhs and INR 1.5 Crores, this depends on your bank too.
Q3. Can banks reject education loans?
If you don’t meet the eligibility rules or have a bad academic score, banks can reject your education loan.
Q4. What are the rules for the repayment of an education loan?
The student loan is supposed to be paid after the moratorium period.
Q5. What are RBI guidelines on tax rebates for education loans in 2024?
The income tax act of section 80E allows you to claim tax benefits on the total interest paid.
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