Let’s break down the RBI-approved rules into simple points. These apply to most scheduled banks and are meant to keep education financing fair and transparent.
The RBI allows banks to issue loans up to the following limits:
Banks may approve higher amounts depending on the institution and your repayment capacity. However, loans beyond these limits usually require additional documentation, collateral, or guarantees.
Margin money is your own contribution, the amount you pay upfront while the bank covers the rest. Here’s what the RBI mandates:
Scholarships or grants can be counted toward margin money, which makes things easier for students with partial funding.
Collateral depends on how much you borrow:
Tip: Even if not mandatory, having a strong co-applicant can help secure better loan terms.
Interest rates are linked to the bank’s base rate with a small markup. RBI allows banks to adjust rates slightly based on:
There’s also a Central Government interest subsidy scheme available for economically weaker sections, covering interest during the moratorium period.
This is the break period where you don’t have to repay immediately. As per RBI norms:
It’s designed to give you time to settle into a job post-graduation.
Loan repayment typically starts after the moratorium. The standard tenure is 10 to 15 years, depending on the loan amount and bank.
Banks may allow flexible EMI options, step-up repayment, or even partial prepayment without any penalty.
Loan amounts are disbursed in Indian Rupees. The bank then converts the amount based on current exchange rates at the time of fee payment, under FEMA (Foreign Exchange Management Act) rules.
Banks only approve loans for foreign universities that are recognized and approved under their policy. Some top-ranked schools may get faster approvals. Always check with your bank in advance.
No loan is granted without an official admission letter and a valid student visa. Some banks may release a small amount in advance for booking fees, but only under conditional approval.
Some banks recommend or require loan insurance to cover the outstanding amount in case something unexpected happens. It’s a small extra cost that protects your family.
Let’s not forget why the RBI set these rules in the first place, to protect students. Here’s how they help: