A credit guarantee of up to Rupees 7.5L is provided without any collateral security and third-party guarantee for education loans covered under the Indian Banks’ Association (IBA) model education scheme under the Credit Guarantee Fund Scheme for Educational Loan (CGF SEL) scheme, according to a recent statement by Minister of State in the Ministry of Finance.
The department of higher education in the Ministry of Education handles the CGF SEL scheme.
Ministers of State in the Ministry of Finance said this in response to questions raised in Parliament on whether the government intends to raise the guarantee limit for education loans for higher studies in India Rupees 7.5L to Rs 10 lakh also other questions raised on the details of the total education loans disbursed by public sector banks (PSBs) and scheduled commercial banks (SCBs) in financial years 2019-20, 2020-21, and 2021-22. These questions related to provisional data for the current FY, and bank-wise details of the total gross non-performing assets of PSBs and SCBs on education loans during the said period. Other questions related to whether PSBs were wary of sanctioning education loans due to an increase in defaults, and if so, the reasons thereof. Also, what steps were being taken by the government to prevent delays and denials in sanction of education loans by banks and improve lending in the educational space? Information available with the Reserve Bank of India (RBI), the total education loan disbursed by SCBs in 2021-22 was Rs 17,715.33 crore, which was lower than Rs 18,350.83 crore in 2020-21, and Rs 18,553.46 crore in 2019-20. Total education loans disbursed by PSBs in 2021-22 was Rs 15,445.62 crore, lower than Rs 16,984.98 crore in 2020-21, which was a tad higher than Rs 16,643.77 crore in 2019-20, according to the RBI.
“According to RBI guidelines, all education loans up to Rs 4 lakh are collateral-free. Further, the government has launched a CGF SEL wherein collateral-free loan is given up to Rs 7.5 lakh. RBI has informed that the Model Education Loan Scheme, 2021 encompasses, inter alia broad guidelines regarding eligibility criteria, courses eligible for a loan, the quantum of finance, security and margin, rate of interest, etc., and banks are broadly guided by the above scheme while sanctioning educational loans,” the statements says has also launched an online portal to ensure hassle-free education loans through a single window system to students. Sanction/rejection will be communicated within 15 days of receipt of a duly completed application with supporting documents in the bank loan application, if any, shall be done with the concurrence of the next higher authority and conveyed to the student stating the reason for rejection. Further, the sanction, as well as rejection (with reasons), should also be reported by the bank concerned on the VLP portal if the property was held for less than 24 months, such profits will be treated as short-term capital gains, and no tax exemption would be available in respect of such gains, even if the profits are reinvested for buying another residential house. Short-term capital gains arising out of such properties are treated as regular income, and they will be taxed at the slab rate applicable to you.
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