Formalities for granting educational loan by Banks

As per the new scheme developed by the Banks, the formalities for taking an educational loan is as under:

The scheme applies only to Indian nationals. The parents should be joint borrowers to the loan. 

Guarantee

If the net worth of the parents do not meet the respective security quantum prescribed by each bank (for eg.3 times or 5 times of loan amount), third party guarantee may be required. However, banks can always waive it in their discretion. In case of married woman student, personal guarantee of husband may be taken. If either or both parents are not alive, then personal guarantee of other persons will be required.

Execution of documents

The student as well as parents should execute the documents as joint borrowers.

Security

The loan has to be secured by personal guarantee. Other than the guarantee, it has to be secured by immovable properties like land and building. Other securities like government securities, public sector bonds, national savings certificate, insurance policies, gold, shares, mutual funds, bank deposits etc can also be accepted.

If the property is already encumbered with some other loans, charge may be accepted to the unencumbered portion. The future income of the student will be assigned towards the repayment of the loan.

There will be processing charges also depending upon the quantum and place of study. Certificate for solvency of sponsor may also be granted in eligible cases.

The Banks may not insist 'No dues' Certificate from the borrowers. In the alternative you may be required to give an affidavit/declaration regarding your liabilities.