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Hassle-free Repayment of Educational loans

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<div style="text-align: justify;">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. </div><div style="text-align: justify;">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.</div><div style="text-align: justify;">Rate of Interest also to be looked into. The institution which is more suitable for the borrower has to be chosen.</div><div style="text-align: justify;">Repayment</div><div style="text-align: justify;">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.</div></div>

Hassle-free Repayment of Educational loans

The Indian Banks Association in consultation with the Central Government and RBI formulated new scheme for the granting of Educational Loan...

IBA Caution List of Third Party Entities

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<div style="text-align: justify;">Banks and other financial institutions are approaching Frauds seriously. This post is about the role of third party entities in Frauds and importance to maintain a record of it.</div><div style="text-align: justify;">Banking is the business of taking money and lending money. Different types of customers approach regularly at the Banks for taking loans. The Banks make use of certain Third Party Entities for the purpose of their daily banking business. It mainly happens when some person approaches a Bank for a loan. For example, in case of a loan one party wants to mortgage his landed property. The Bank manager may not know the correct status of the title of the borrower. In such cases the services of a lawyer will be required to find out whether there are any legal impediments in accepting the said property as security for the advance to be granted. It must be known that the title to the property is clear. So an advocate can be said to be a third party entity. Like wise, a valuer who values the property for the purpose of determining the sanction limit of loan and for knowing the amount of security comes into the hands of Bank at the time of recovery of the loan by sale. There are other third party entities.Third Party Entities can be defined as individuals or group of individuals, </div><div style="text-align: justify;">whether incorporated or not, used by bank or its customers/agents, for their product/service/expertise, based on which these entities sell products/provide services/give opinions/certify the accuracy of statements/valuation of assets/ownership of assets, etc. The Bank takes a decision based on the documents /opinion/certification given by these entities and enters into a financial transaction with the customer. The transaction could be related to any service the bank provides to its customers. When any problem occurs it will adversely affect the Bank's business. </div><div style="text-align: justify;">Reserve Bank of India conducted an analysis about the frauds committed by such third party entities for their own selfish purposes thereby putting the Bank's stand in stake. The analysis revealed that there is an increasing trend of fraud being committed in this area especially those pertaining to retail loans such as housing </div><div style="text-align: justify;">loans, commodity financing against warehouse receipts, loans for purchase of agricultural implements from dealers, vehicle loans and credit card cases. The main role of third parties such as builders, warehouse/cold storage owners, tractor/car dealers, travel agents etc is found out. Similarly, advice given by professionals like </div><div style="text-align: justify;">Chartered Accountants, Valuers, Architects, Advocates etc seem to have impact on the fraud cases. They tend to collude with the fraudsters by giving fake/questionable certificates.</div><div style="text-align: justify;">Reserve Bank of India has now asked banks to build up an internal database on such third parties in a systematic manner and resort to mutual exchange of data on an ongoing basis. But the Banks should first know whether there is any role of such third party entities in the fraud committed. Then the Banks should prepare a Caution List of these entities involved in fraud cases. A centralised database of all such entities is </div><div style="text-align: justify;">maintained with full details like name of agency, names of partner/proprietor/directors, registration number if applicable, address and Permanent Account Number.</div><div style="text-align: justify;">If any third party entity is found engaged in any case of fraud of a particular Bank, that Bank can upload that information which will be a caution for other Banks for not using their services.</div></div>

IBA Caution List of Third Party Entities

Banks and other financial institutions are approaching Frauds seriously. This post is about the role of third party entities in Frauds and ...

Formalities for granting educational loan by Banks

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<div style="text-align: justify;">As per the new scheme developed by the Banks, the formalities for taking an educational loan is as under:</div><div style="text-align: justify;">The scheme applies only to Indian nationals. The parents should be joint borrowers to the loan. </div><div style="text-align: justify;"><i>Guarantee</i></div><div style="text-align: justify;">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.</div><div style="text-align: justify;"><i>Execution of documents</i></div><div style="text-align: justify;">The student as well as parents should execute the documents as joint borrowers.</div><div style="text-align: justify;"><i>Security</i></div><div style="text-align: justify;">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.</div><div style="text-align: justify;">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.</div><div style="text-align: justify;">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.</div><div style="text-align: justify;">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.</div></div>

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...

Settlement of Death Claims by Banks

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<div style="text-align: justify;">This post is meant to help those who are having an account with the Banks. This post will generally explain how most of the Banks; either Public or Private, are settling Death Claims.</div><div style="text-align: justify;">First we will see what a Death Claim is. In simple words, claiming money/amount in an account by the legal heirs of the deceased account holder is a Death Claim. The account holder may hold different types of accounts. The nature, amount, operational condition, etc may vary. Banks follow almost similar method in settling the claim application submitted by the claimants. According to the nature and other things, certain requirements will vary.</div><div style="text-align: justify;"><i>When a claim application will arise</i></div><div style="text-align: justify;">A Claim Application will rise when there is no nomination registered with the account. If the nomination is registered in the account, the amount after the death of the account holder will go to the nominee as per the procedure. So if there is no nomination the claim will be settled as per the guidelines followed by each Banks as per the general procedure as follows:</div><div style="text-align: justify;"><b><i>Claim Application</i></b></div><div style="text-align: justify;">First of all the Bank will require the Claimant/s to file an application to get the amount in the account of the deceased account holder to them. There will be prescribed formats for each Banks. The form will include space for entering the name of the deceased, full address of the deceased, date of death, place of death, proof of death, names of the claimants, their age, relationship with the deceased account holder etc.</div><div style="text-align: justify;"><b><i>Declarations or affidavits</i></b></div><div style="text-align: justify;">The application will have to be accompanied by declarations by two or more independent persons who know the deceased person and not related with him or the claimants. The declaration form will include spaces for entering the name and full address of the deceased persons, names of the claimants, their ages, etc. The declaration will add trustworthiness to the claim preferred by the applicants. However the declarants have to be respectable persons known to the Bank and are worthy of the claim amount. They may need to have sufficient account balance with the bank or have net worth either equal to the claim amount or higher than the claim amount and should have recent transactions. The account must be running.</div><div style="text-align: justify;"><b><i>Proof of Death</i></b></div><div style="text-align: justify;">The proof of Death is to be provided by the applicants along with the claim application. Documentary evidence need to be given by the claimants in proof of the death of the account holder.The Death Certificate has to be obtained from the Registrar of Births and Deaths. Even if the Bank has direct knowledge of the death of the customer, the provision is mandatory.</div><div style="text-align: justify;"><b><i>Receipt, Indemnity Bond and Affidavit</i></b></div><div style="text-align: justify;">The Bank should obtain a signed receipt from the claimants while disbursing the amount. Indemnity Bond in stamp paper properly notarised is also needed. An affidavit declaring that the claimants are the only legal heirs of the deceased also may be required.</div></div>

Settlement of Death Claims by Banks

This post is meant to help those who are having an account with the Banks. This post will generally explain how most of the Banks; either P...

What are the courses eligible for education bank loan?

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<div style="text-align: justify;">The Government of India in consultation with Reserve Bank of India and Indian Bank's Association has framed new Educational Loan Scheme to ensure better treatment of loan applicants who want to pursue higher studies both in India and abroad. The aim is to provide affordable terms and conditions while taking loan.</div><div style="text-align: justify;">The courses eligible under the loan are mentioned below:</div><div style="text-align: justify;"><i>The courses in India are,</i></div><div style="text-align: justify;">i) Graduation courses like Bachelor of Arts, Bachelor of Commerce Bachelor of Science, etc.</div><div style="text-align: justify;">ii) Post Graduation courses like Masters Degree & Ph.D.</div><div style="text-align: justify;">iii) Professional Courses like Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer, etc.</div><div style="text-align: justify;">iv) ICWA, CA, CFA, etc.</div><div style="text-align: justify;">v) Courses conducted by IIT, IIM, IISC, XLRI, NIFT, etc.</div><div style="text-align: justify;">vi) Courses offered in India by reputed foreign universities</div><div style="text-align: justify;">vii) Evening Courses of approved institutes.</div><div style="text-align: justify;">viii) Other courses conducted by colleges, universities, approved by UGC, Govt./AICTE, AIBMS/ICMR etc. leading to diploma/degree.</div><div style="text-align: justify;">ix) Courses offered by National Institutes and other reputed private Institutions.</div><div style="text-align: justify;">x) Regular Degree and Diploma courses like aeronautical, pilot training, shipping et cetera approved by Director General of Civil Aviation / Shipping</div><div style="text-align: justify;">xi) Teacher Training Course / Nursing Course / B.Ed where the training institutions are approved either by Central or State Government and leading to Degree or Diploma.</div><div style="text-align: justify;">xii) The Aircraft Maintenance Engineering/ Pre Sea training courses are eligible for the loan only if it is either a Degree Course recognized by a competent University or Diploma Course recognized by appropriate State Body.</div><div style="text-align: justify;"><i>Studies Abroad</i></div><div style="text-align: justify;">i.Job oriented professional and technical graduation courses offered by reputed universities.</div><div style="text-align: justify;">ii.Post Graduation courses like MCA, MBA, MS etc.</div><div style="text-align: justify;">iii.Courses conducted by CIMA – London, CPA in USA etc</div><div style="text-align: justify;">iv.Regular Degree and Diploma courses like aeronautical, pilot training, shipping et cetera recognized by the competent local aviation / shipping authority.</div></div>

What are the courses eligible for education bank loan?

The Government of India in consultation with Reserve Bank of India and Indian Bank's Association has framed new Educational Loan Scheme...

Educational loans to reach out for your goal

<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;">Nowadays education has become hitech and every meritorious student can pursue his dream of higher education in India and abroad with the help of Banks who is on the verge of liberalising the norms for the grant of educational loans. As Indian Banks Association took the initiative for a better treatment of the students seeking higher education, things may go easier now. They have devised a new scheme for educational loan.</div><div style="text-align: justify;">The new scheme envisages merit as the sole criteria. Management quota seats will be out of the purview of the scheme.There will be consensus between quantum of loan and employment potential of the studies.The term also will be extended providing a sigh of relief for the borrowers.</div><div style="text-align: justify;">The policy promises to be a relief in the times of cost of education touching whopping heights. The main change is the assessment of loan. It will be based on the future earning capacity of the student and not the wealth of the parent.</div><div style="text-align: justify;">The policy is meant for Indian nationals. The student should have passed some merit selection test. In certain cases banks can also look the employability and reputation of the institution.</div><div style="text-align: justify;">Mainly the scheme targets job-oriented courses in technical and professional fields. Fees, caution deposits, transportation charges, amount required for purchase of study materials etc will be the key things in the loan. The parents will have to become joint borrowers. There is an incentive for girl students. Anyhow the interest portion is left with the individual banks. It is linked to the base rates.</div></div>

Educational loans to reach out for your goal

Nowadays education has become hitech and every meritorious student can pursue his dream of higher education in India and abroad with the hel...

Non-Resident Borrower Housing Loan Repayment

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<div style="text-align: justify;">Reserve Bank of India notified very helpful measure in the matter of repayment of loans taken by Non-Resident Indians.The notification was meant to all the Banks authorised to deal in Foreign Exchange.The notification empowers residents to repay the loan taken by theirs close relative non-resident Indians. However the facility is only extended to the Housing Loans.</div><div style="text-align: justify;">RBI had already notified Foreign Exchange Management Act provisions in 2000 wherein housing loan provided to a non-resident Indian or a person of Indian origin resident outside India by an authorised dealer or a housing finance institution in India approved by the National Housing Bank for acquisition of a residential accommodation in India, may be repaid by any relative of the borrower in India. The amount can be repaid by crediting the borrower's loan account through the Bank account of such relative. A relative has the same meaning in Section 6 and Schedule IA of Companies Act, 1956. The relatives enlisted in these provisions will be coming under this notification.</div><div style="text-align: justify;">The directions are issued by RBI under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.</div></div>

Non-Resident Borrower Housing Loan Repayment

Reserve Bank of India notified very helpful measure in the matter of repayment of loans taken by Non-Resident Indians.The notification was ...