Banks to offer novel education loans

By | April 6, 2010

With quality Indian education becoming beyond the reach of the average Indian students, finance is the first thing many of them think about an educational loan. This is where banks have stepped in with novel education loans.

After personal loans, banks are now targeting educational loans as the next big market. To capitalize on this segment Union Bank of India has introduced an education offering called as ‘Union Education (Special Education Loan Scheme)’ meant for studies at premier Indian B-schools.

In this scheme, there is a uniform rate of interest for any type of course. There is no collateral and you can get the entire amount as loan. The repayment period is higher than other banks.

HDFC Bank also provides a unique product for top management institutes, where you need to offer collateral as stipulated by the Reserve Bank of India. The loan tenure is maximum of 7 years inclusive of  the repayment holiday period. These loans have fixed rate of interest between 10.50-13%. The bank expects to introduce floating rate schemes soon.

State Bank of India offers only floating rate educational loan at 11.75%, with girls getting a concession of 0.5%. The maximum amount of loans for studies in India is 10 lakhs and you need to offer collateral for amounts over Rs 7.5 lakh.

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