The Indian Banks Association in consultation with the Central Government and RBI formulated new scheme for the granting of Educational Loans. Loan is a boon and a bane at the same time. It is a profit/asset in the case of bankers and a liability in the case of customers.
Students are a fragile category when banks are considered.(at least for some banks) The risk is more. Banks tend to give loan to those students whose parents' networth are more than 5 to 10 times of the loan amount. If that criterion fits, the Banks may give loan to any students irrespective of the merit. But the new scheme provides a merit based selection for the loan eligibility. But since it is a liability upon the borrowers(both students and parents) and guarantors, the terms of repayment is the key thing which should be looked into in detail.
Rate of Interest also to be looked into. The institution which is more suitable for the borrower has to be chosen.
Repayment
The repayment has to be made promptly. But if the student is unable to complete the course within the stipulated time, happy thing is that extension of time may be provided. A maximum extension up to two years will be provided. But in other cases which are beyond the control of the student, the sanctioning authority may have discretion to extend the time. Even in the case of discontinuing studies in the middle, the repayment schedule will be worked out by the Banks in consultation with the student/parent.
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