Name of the loan: Study Power

Nature of loan:

The purpose of the product is to provide financial support to deserving students for pursuing higher professional/technical education in India and abroad. The loan would be provided to students who have obtained admission to career-oriented courses e.g. medicine, engineering, management etc., either at the graduate or post-graduate level.

Quantum of Loan:

The quantum of finance under the scheme is capped at Rs. 7.5 lakhs for studies in India and Rs. 15 lakhs for studies abroad, which would cover tuition fees, hostel charges (if any), cost of books, etc. The minimum amount of loan would be Rs. 50,000/-.

Margin:

No margin for loans up to Rs. 4 lakhs. For loans above Rs. 4 lakhs, 5% margin for studies within India and 15% for higher studies overseas.

Rate of interest:

At PLR, currently not exceeding 12% p.a.

Role of the Guardian:

The parent(s)/guardian of the student would be treated as a co-applicant of the loan. His/her role would be, necessarily, like the primary debtor. He/she would be responsible for the payment of the interest accrued on the loan account, prior to the commencement of the EMIs.

Security:

 Third Party Guarantee: It is necessary to have a 3rd party guarantee agreement in place, especially in cases where the loan would be not be secured by liquid collaterals (e.g. Units, FDs, NSCs, paid-up LIC policies, etc.). The guarantor should not be a close relation of the student (i.e. parents/siblings/spouse, etc.) and should be good for 100% of the loan amount. No 3rd party guarantee need be insisted upon for loan up to Rs. 4 lakhs. Computers and other related hardware financed under the scheme would have to be, necessarily, charged to the Bank as primary security.

 Collateral Security: Educational Loans sanctioned would need to be secured by collateral securities, to the minimum extent of 100% of the loan amount.

 Additional Security: In educational loans, since the ultimate exposure is on the earning capacity of the student, post-completion of the course, it is essential to organize a LIC policy assuring the life of the student, the sum assured being at least 100% of the loan amount.

Repayment:

The loan would be repayable in a maximum of 84 installments from the commencement of repayment. The 1st installment would be due 1 year after the completion of the course or 6 months after getting a job, whichever is earlier. However the total tenure of the scheme, i.e. from the date of the 1st disbursement to the date of the last installment, should not exceed 12 years. The periodical interest applied on the loan account, prior to the commencement of the actual repayment, should be recovered from the account of the co-applicant, as and when due

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