Karnataka Bank Education Loan

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Karnataka Bank Education Loan

Incorporated in the year 1924 with its first office and subsequent headquarters in Mangalore, Karnataka Bank Limited is one of the leading ‘A’ Class Scheduled Commercial Bank. The bank was founded in the backdrop of the freedom struggle movement with the aim of catering to South Indian region. Currently the bank has its presence across the country i.e., 22 states and 2 UTs with a network of 858 branches and 8,220 employees.

Overview of variants in education loan schemes offered by KBL

Scheme Name Details
KBL VidyaNidhi
  • Loan facility for Indian national students who have secured admission to higher education in India or abroad.
Skill Loan Scheme
  • Loan scheme to provide financial support for students wanting to pursue skill development courses from either Industrial Training Institutes or in any Polytechnic institutes or in any Skill Development and Training Institutes affiliated to NSDC or in any state government promoted skill development programmes and workshops that leads to a diploma or certificate courses.

Further details of the KBL’s scheme mentioned in above table

1. KBL VidyaNidhi

The said loan scheme is for Indian national students wanting to pursue higher education in India or abroad and admission has been secured for the same.

Courses that the loan scheme covers in India are:

  • CA/ CWA/ CS
  • Engineering graduate degree or PG in Engineering from recognized institutes such as IITs. NITs, Government run technical colleges and universities etc.
  • Technical Diploma course consisting of 3 years offered by any AICTE approved polytechnic institutes
  • Courses offered in Indian colleges / institutes by foreign universities which includes evening / weekend courses
  • MBA /PGDM / PGPM / PGPX from ISB Hyderabad, IIMs, IITs, IIFT, XLRI etc
  • Doctoral studies from IITs, IISc or any other Central or State Universities
  • MBBS & MD from top medical colleges and institutes recognized by ICMR in India
  • Special courses or diploma in pilot training, aeronautical sciences, maritime studies etc.
  • Professional courses – Law, Hotel Management, Dentistry, Veterinary, Agriculture, etc.
  • Any other higher education courses recognized by academic bodies such as UGC / AICTE / AIBMS / State and Central Government.

Courses that the loan scheme covers abroad:

  • Job oriented/ professional/ technical/ graduation or PG degree/ MCA/ MBA/ MS offered by reputed institutes
  • Courses offered by CIMA, UK and CPA / CFA of USA

The maximum quantum of loan amount for studies in India is up to ₹10 lacs. In case of abroad, the maximum amount is ₹20 lacs.

No margin is applicable for any loan amount of up to ₹4 lacs and an amount above ₹4 lacs will attract a margin of 5% for studies in India and 15% for studies in abroad. Scholarship amounts can be considered for margin as well.

Almost all expenses of the course (including study tours, hostels, library, laboratory, equipment, books, project work, examination, caution deposit, purchase of computer / laptop, travel expenses for studies in abroad, etc.) are covered under the scheme.

For any loan amount up to ₹7.50 lacs, no collateral security is mandatory while parent(s) / guardian will be required to sign up as co-borrower and third-party guarantee will be required to sign up for loan amount between ₹4 lacs and ₹7.50 lacs.

Amount that is more than ₹7.50 lacs will require collateral and tangible security equivalent to the amount availed.

Below describes the rate of interest* facility under this loan scheme:

Repayment –

The loan repayment tenure is up to a maximum of 15 years post the completion of course and subsequent moratorium period. If the student is unable to complete the course within the stipulated time, he / she is permitted to have a maximum of 2 years duration for completing the same. Further extension is only granted if the circumstances are beyond the control of the student and is thus unable to complete the course.

The interest that was accrued during the moratorium period will be added to the total repayment amount (principal + interest) to be paid back in EMIs which will be fixed as per borrower’s convenience.

Central Sector Interest Subsidy Scheme (CSIS Scheme):

The Government of India had introduced the full interest rate subsidy for the duration of moratorium, on education loan availed by students of economically weaker sections, who are willing to pursue graduation or post-graduation courses, technical courses, diplomas or degrees, professional courses, offered by recognized and renowned institutions in India.

The subsidy scheme is applicable only to the economically weaker section students where the maximum income earned from all sources by the family of applicant must not exceed ₹4.50 lacs p.a. and the education loan amount availed up to ₹7.50 lacs.

The further information on this government scheme can be referred in the following link – Know More

2. Skill Loan Scheme

Skill loan scheme is a government backed loan facility that is offered by all public sector and scheduled banks in India.

To avail the loan scheme, the applicant must have registered for courses offered by Industrial Training Institutes (ITIs) or any polytechnic institutes or any recognized centres for training of skill development or any training partners affiliated to NSDC or State Skill Corporation, which leads to issuance of degree / diploma / certificate as prescribed by the National Skill Qualification Framework.

Quantum of finance under the scheme

Minimum amount of loan- ₹5,000/-

Maximum amount of loan – ₹1,50,000/-

For any course that is for a duration of up to 6 months, the loan amount is ₹50,000/- and for courses exceeding 6 months duration, the amount is up to ₹1,50,000/-

Although no collateral or third-party guarantee is required, the applicant’s parent will be required as joint borrower.

Expenses covered under this scheme is limited to tuition / college / institute fees, examination fees and any such costs that can be justified for the completion of course.

Moratorium period under this scheme depends on the duration of the course.

  • For any course that is up to 1 year – moratorium period will be for 6 months from the completion of course.
  • For courses that are more than 1 year – the moratorium period will be applicable for 12 months from course completion.

Repayment period will be initiated after the completion of moratorium period.

  • Loan up to ₹50,000 – 3 years
  • ₹50,000 to ₹1 lac – 5 years
  • More than ₹1 lac – 7 years

Below describes the rate of interest* facility under this loan scheme:

*Rate of Interest – The Base rate is 9.25% (w.e.f 01st July, 2020)

Documents Required for the above loan schemes

Apart from the duly filled loan application form for the respective scheme, the self-attested copies of following documents will have to be submitted as well:

  • SSC, HSC marksheets; Graduation marksheets (if applicable and students wanting to pursue PG or further education)
  • Entrance exam scorecard (CAT / GMAT / XAT / GRE / NEET / JEE etc.)
  • Admission proof (offer letter / admission letter)
  • Fee / expense schedule from the institute / university for the entire course
  • Scholarship certificates (if any)
  • Gap certificate (if any – self declaration by applicant regarding gap in studies)
  • Passport size photographs of applicant (student), co-borrower (parent), third party guarantor (if any)
  • In case of salaried persons –
  1. Latest salary slips – of previous 2 months
  2. Copy of Form 16 / recently filed Income Tax Return – of last 2 years
  • In case of non-salaried persons –
  1. Address proof of business (if applicable)
  2. Copy of latest Income Tax Returns – of last 2 years
  • Bank account statements for the 6 months of Parent / Co-borrower/ guarantor
  • Documents relating to collateral and tangible security (if applicable)
  • PAN (Permanent Account Number) Card Copy for identity proof of applicant/ Co-borrower (parent)/ Guarantor (self-attested)
  • Aadhar (UID) Card copy of student /co-borrower (parent)/guarantor for address proof (self-attested)
  • Passport Copy (mandatory for loan availed towards studies abroad)
  • Voter’s ID card issued by Election Commission of India
  • Job card issued by NREGA and duly verified by a gazetted officer of government (in the case of Skill Loan Scheme)

How to Apply for the loan

Online process – The above-mentioned KBL Education loan schemes can be applied via online from Vidya Lakshmi Portal, which is a centralized portal specifically catering to students wanting to explore multiple options offered by various banks before choosing the appropriate loan scheme which is in tandem to the applicants’ needs.

If applied via website, the page will still take the applicant to Vidya Lakshmi Portal.

Post applying online via portal, one will need to take printouts of the application form and along with the aforementioned documents’ copies, must visit the nearest branch to complete the entire loan process.

Insurance –

Karnataka Bank has not yet included insurance cover in the standard procedures of education loan application as of now, they may as well make it mandatory in the near future, especially where collateral security is not applicable.

Nevertheless, the applicant / co-borrower is free to opt for an insurance cover out of his / her own will.

Few reasons for inclusion of insurance cover are –

  • Covering of default risk rising due to poor job markets
  • Exchange rate risks in the case of overseas education loans
  • Below satisfactory campus placement records
  • Possibility of discontinuation of course by student or debarring by institutions on disciplinary or academic grounds.

Note – At the time of enquiring about these Education Loan schemes, kindly confirm with the bank officials regarding the opening of savings bank account for loan disbursement.

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