When Education Loan Will Become Npa?

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When Education Loan Will Become Npa
One-Time Settlement of My Education Loan – A one-time settlement is offered by the banks to the borrower to settle the outstanding loan balance at a negotiable amount. Banks consider it when a loan becomes a Non-Performing Asset (NPA). So, the bank decides to cut its losses by considering an amount below the actual balance of the loan.
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Is education loan an NPA?

High NPAs in education loan segment turn banks cautious High defaults of about 8 per cent in the portfolio have made banks cautious and go slow on the sanction of such credit. Non-performing assets (NPAs) in the education loan category including public sector banks’ (PSBs) were 7.82 per cent at the end of June quarter of the current financial year.

  • Outstanding education loans were about Rs 80,000 crore at June-end.
  • Cautious approach is adopted at the end of branches while sanctioning education loans due to high NPAs, a senior public sector bank official said.
  • As a result some genuine cases are overlooked and there are delays, the official said.
  • Recently, the finance ministry had called a meeting of PSBs to take stock of the education loan portfolio and cut down on delay.

The ministry exhorted banks to spread awareness about the among field formations. The sharp increase in non-performing assets (NPA) in education loans extended by commercial banks in in recent years is a matter of concern, as it could hamper the growth of bank credit for higher education in the country, according to an occasional paper published by,

  1. In India, around 90 per cent of education loans are disbursed by the PSBs.
  2. Private sector banks and regional rural banks (RRBs) accounted for around 7 per cent and 3 per cent of total education loan outstanding, respectively, as at end- March 2020, the paper published in June 2022 said.
  3. The outstanding education loans of all banks were Rs 79,056 crore at the end of March 2020 and at Rs 78,823 crore as of March 2021, as per the Report on Trend and Progress of Banking in India 2020-21 by the RBI.

However, the outstanding loans increased to Rs 82,723 crore as of March 25, 2022.

According to managing director,, fresh job creation has not kept pace with the number of graduates coming out of the colleges, thereby adversely impacting the timely repayment of education loans. Most banks offer a scheme for education loan as per the Indian Banks’ Association () model education loan scheme to students pursuing higher studies in India and abroad. The third category of education loans includes schemes for needy students for pursuing vocation education courses run by industrial training institutes (ITIs), polytechnics, training partners affiliated to (NSDC)/sector skill councils, state skill mission/corporation, preferably leading to a certificate/diploma/degree issued by such organisation as per National Skill Qualification Framework (NSQF) and any other institutions recognized by either the central or state education boards or university.

As a result, NPAs have gone up and banks are hesitant to grant fresh education advances, particularly loans up to Rs 7.50 lakh which are without any collateral and third party guarantee, he said. The effective implementation of the New Education Policy, which lays due emphasis on basic skills development and employability, shall create a win win situation for all the stakeholders, he added.

As per this model loan scheme, education loans of up to Rs 4 lakh do not require any collateral to be provided by the borrower, education loans up to Rs 7.5 lakh can be obtained with collateral in the form of suitable third-party guarantee, while education loans above Rs 7.5 lakh require tangible collateral.

In all the above cases, co-obligation of parents is necessary. The second category of education loans are sanctioned to those students who obtain admissions to colleges/universities through management quota, provided they satisfy the minimum marks criteria in the preceding examination.

The fourth category of scheme specifically caters to the requirement of students studying in premier institutions like IITs/IIMs/NITs/IISc or courses abroad, with demand for a higher quantum of loan amount. All education loans of up to Rs 10 lakh (enhanced to Rs 20 lakh in September 2020) have been included within the priority sector definition by the,

Under most of these schemes, moratorium period consists of the course period plus six months to one year, and there are nil/negligible processing fees for schemes with high value education loans. The interest rate under the various schemes consists of a markup of 2-3 per cent above the marginal cost of funds based lending rate (MCLR)/external benchmark, based on the reputation of the course/institutions.
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When a loan is considered as NPA?

RBI/2021-2022/125 DOR.STR.REC.68/21.04.048/2021-22 November 12, 2021 All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks) excluding Payments Banks All Primary (Urban) Co-operative Banks/State Co-operative Banks/District Central Co-operative Banks All-India Financial Institutions (Exim Bank, NABARD, NHB and SIDBI) All Non-Banking Financial Companies (including Housing Finance Companies) Madam/Dear Sir, Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Clarifications Please refer to the Master Circular on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances (IRACP norms) dated October 1, 2021, With a view to ensuring uniformity in the implementation of IRACP norms across all lending institutions, certain aspects of the extant regulatory guidelines are being clarified and/or harmonized, which will be applicable mutatis mutandis to all lending institutions. Wherever references to circulars/instructions applicable to banks have been made, other lending institutions may refer to instructions as applicable to them. All the instructions in this circular, except those at paragraphs 2, 8-9 and 13, shall be effective immediately from the date of this circular.A. Specification of due date/repayment date 2. The extant instructions on IRACP norms specify that an amount is to be treated as overdue if it is not paid on the due date fixed by the bank. It has been observed that due dates for repayments are sometimes not specifically mentioned in the loan agreements, and instead a description of due dates is mentioned, leaving scope for different interpretations. Henceforth, the exact due dates for repayment of a loan, frequency of repayment, breakup between principal and interest, examples of SMA/NPA classification dates, etc. shall be clearly specified in the loan agreement and the borrower shall be apprised of the same at the time of loan sanction and also at the time of subsequent changes, if any, to the sanction terms/loan agreement till full repayment of the loan. In cases of loan facilities with moratorium on payment of principal and/or interest, the exact date of commencement of repayment shall also be specified in the loan agreements. These instructions shall be complied with at the earliest, but not later than December 31, 2021, in respect of fresh loans. In case of existing loans, however, compliance to these instructions shall necessarily be ensured as and when such loans become due for renewal/review.B. Classification as Special Mention Account (SMA) and Non-Performing Asset (NPA) 1 3. The circular DBR.No.BP.BC.45/21.04.048/2018-19 dated June 7, 2019 on ‘Prudential Framework for Resolution of Stressed Assets’ requires the lenders to recognize incipient stress in borrower accounts, immediately on default, by classifying them as special mention accounts (SMA). In order to remove any ambiguity, it is clarified that the intervals are intended to be continuous and accordingly, the basis for classification of SMA categories shall be as follows:

Loans other than revolving facilities Loans in the nature of revolving facilities like cash credit/overdraft
SMA Sub-categories Basis for classification – Principal or interest payment or any other amount wholly or partly overdue SMA Sub-categories Basis for classification – Outstanding balance remains continuously in excess of the sanctioned limit or drawing power, whichever is lower, for a period of:
SMA-0 Upto 30 days
SMA-1 More than 30 days and upto 60 days SMA-1 More than 30 days and upto 60 days
SMA-2 More than 60 days and upto 90 days SMA-2 More than 60 days and upto 90 days

4. In the above context, it is further clarified that borrower accounts shall be flagged as overdue by the lending institutions as part of their day-end processes for the due date, irrespective of the time of running such processes. Similarly, classification of borrower accounts as SMA as well as NPA shall be done as part of day-end process for the relevant date and the SMA or NPA classification date shall be the calendar date for which the day end process is run.

In other words, the date of SMA/NPA shall reflect the asset classification status of an account at the day-end of that calendar date. Example: If due date of a loan account is March 31, 2021, and full dues are not received before the lending institution runs the day-end process for this date, the date of overdue shall be March 31, 2021.

If it continues to remain overdue, then this account shall get tagged as SMA-1 upon running day-end process on April 30, 2021 i.e. upon completion of 30 days of being continuously overdue. Accordingly, the date of SMA-1 classification for that account shall be April 30, 2021.

Similarly, if the account continues to remain overdue, it shall get tagged as SMA-2 upon running day-end process on May 30, 2021 and if continues to remain overdue further, it shall get classified as NPA upon running day-end process on June 29, 2021.5. It is further clarified that the instructions on SMA classification of borrower accounts are applicable to all loans 2, including retail loans, irrespective of size of exposure of the lending institution.C.

Clarification regarding definition of ‘out of order’ 6. Cash credit/Overdraft (CC/OD) account is classified as NPA if it is ‘out of order’. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, the extant instructions, inter alia, stipulate that the account should be treated as ‘out of order’ if there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period.

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the outstanding balance in the CC/OD account remains continuously in excess of the sanctioned limit/drawing power for 90 days, or the outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but there are no credits continuously for 90 days, or the outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but credits are not enough to cover the interest debited during the previous 90 days period.

7. Accordingly, treatment of CC/OD accounts as ‘out of order’ on or after the date of this circular shall be based on the above instructions.D. NPA classification in case of interest payments 8. In terms of paragraph 2.1.3 of the Master Circular on IRACP norms dated October 1, 2021, in case of interest payments, an account is classified as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter.

In order to fully align with the 90 days delinquency norm as well as the requirement to apply interest at monthly rests, the above instructions are modified as under: In case of interest payments in respect of term loans, an account will be classified as NPA if the interest applied at specified rests remains overdue for more than 90 days.9.

These instructions shall be effective from March 31, 2022. Accordingly, in respect of any borrower account which becomes overdue on or after March 31, 2022, its classification as NPA shall be based on the account being overdue for more than 90 days.E.

  1. Upgradation of accounts classified as NPAs 10.
  2. It has been observed that some lending institutions upgrade accounts classified as NPAs to ‘standard’ asset category upon payment of only interest overdues, partial overdues, etc.
  3. In order to avoid any ambiguity in this regard, it is clarified that loan accounts classified as NPAs may be upgraded as ‘standard’ asset only if entire arrears of interest and principal are paid by the borrower.

With regard to upgradation of accounts classified as NPA due to restructuring, non-achievement of date of commencement of commercial operations (DCCO), etc., the instructions as specified for such cases shall continue to be applicable.F. Income recognition policy for loans with moratorium on payment of interest 11.

In cases of loans where moratorium has been granted for repayment of interest, lending institutions may recognize interest income on accrual basis for accounts which continue to be classified as ‘standard’. This shall be evaluated against the definition of ‘restructuring’ provided in paragraph 1 of the Annex-1 to the above-mentioned ‘ Prudential Framework for Resolution of Stressed Assets’ dated June 7, 2019,

However, income recognition norms for loans towards projects under implementation involving deferment of DCCO 3 and gold loans for non-agricultural purposes 4 shall continue to be governed as per the existing instructions.12. The extant instructions (compiled at paragraph 3.2 of the Master Circular on IRACP norms dated October 1, 2021 ) require that once an account is classified as NPA, the entire interest accrued and credited to income account in the past periods, must be reversed to the extent it remains unrealised.

It is clarified that if loans with moratorium on payment of interest (permitted at the time of sanction of the loan) become NPA after the moratorium period is over, the capitalized interest corresponding to the interest accrued during such moratorium period need not be reversed.G. Consumer Education 13.

With a view to increasing awareness among the borrowers, lending institutions shall place consumer education literature on their websites, explaining with examples, the concepts of date of overdue, SMA and NPA classification and upgradation, with specific reference to day-end process.

  1. Lending institutions may also consider displaying such consumer education literature in their branches by means of posters and/or other appropriate media.
  2. Further, it shall also be ensured that their front-line officers educate borrowers about all these concepts, with respect to loans availed by them, at the time of sanction/disbursal/renewal of loans.

These instructions shall be complied with at the earliest, but not later than March 31, 2022. Yours faithfully, (Manoranjan Mishra) Chief General Manager
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How NPA is declared?

Banks classify NPAs as doubtful assets, substandard assets, loss assets, based on the period and the amount of payment overdue. Financial lenders can recover their losses by selling out the NPA or taking its possession.
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What happens if education loan NPA?

A one-time settlement is offered by the banks on loans that are considered near to becoming a Non-Performing Asset (NPA). In this situation, a bank decides to cut its losses by considering an amount below the value of the loan.
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What happens if student loans are not paid?

If you don’t make your student loan payment or you make your payment late, your loan may eventually go into default. If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability.
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What is the new rules for NPA?

RBI/2021-2022/158 DOR.STR.REC.85/21.04.048/2021-22 February 15, 2022 All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks) excluding Payments Banks All Primary (Urban) Co-operative Banks/State Co-operative Banks/District Central Co-operative Banks All-India Financial Institutions (Exim Bank, NABARD, NHB and SIDBI) All Non-Banking Financial Companies (including Housing Finance Companies) Madam/Dear Sir, Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Clarifications Please refer to the clarifications issued in respect of Prudential norms on Income Recognition, Asset Classification and Provisioning vide circular DOR.STR.REC.68/21.04.048/2021-22 dated November 12, 2021 (‘ Circular ‘).2.

The definition of ‘out of order’, as clarified in the Circular, shall be applicable to all loan products being offered as an overdraft facility, including those not meant for business purposes and/or which entail interest repayments as the only credits. The ‘previous 90 days period’ for determination of ‘out of order’ status of a CC/OD account shall be inclusive of the day for which the day-end process is being run. In case of borrowers having more than one credit facility from a lending institution, loan accounts shall be upgraded from NPA to standard asset category only upon repayment of entire arrears of interest and principal pertaining to all the credit facilities. The circular does not make any changes to the requirements related to reporting of information to CRILC, which will continue to be governed in terms of extant instructions for respective entities 1, The circular does not, in any way, interfere with the extant guidelines on implementation of Ind-AS by NBFCs.

3. Paragraph 10 of the Circular stipulates that loan accounts classified as NPAs may be upgraded as ‘standard’ asset only if entire arrears of interest and principal are paid by the borrower. NBFCs shall have time till September 30, 2022 to put in place the necessary systems to implement this provision.

  • All other instructions of the Circular shall continue to be applicable as per the timelines specified therein.
  • Yours faithfully, (Manoranjan Mishra) Chief General Manager 1 Circular No.
  • DBS.Dir.OSMOS.No.3327/33.01.001/2013-14 dated September 11, 2013 (SCBs) Circular No.
  • DNBS (PD) CC.No.371/03.05.02/2013-14 dated March 21, 2014 (NBFCs) Circular No.

DBS.OSMOS.No.14703/33.01.001/2013-14 dated May 22, 2014 (AIFIs) Circular No. DOR (PCB).BPD.Cir.No.7/13.05.000/2019-20 dated December 27, 2019 (UCBs)
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Can NPA be written off?

Banks have written off loans worth Rs 10 lakh crore in last 5 years: Report In the past five years, Rs 10 lakh crore in write-offs have aided banks to reduce their Non Performing Assets (NPA) by half. The banks reportedly have only recovered Rs 1.32 crore lakh from the write-offs during this time till March 2022.

The RBI’s reply was in response to an RTI The Indian Express,The reply from RBI said that the write-offs have allowed the banks to keep a lid on defaulted loans of Rs 10,09,510 crore in the past five years. What is an NPA?

Any loan prvided by a bank can turn into an NPA if the principal or interest payment for the same has not been paid for over 3 months. The banks, according to the RTI reply by RBI, have only recovered 13 per cent of the total amount that is in NPAs and defaulted loans after writing off over Rs 10 lakh crore.

  • Also Read | The write-off has resulted in the domestic banking sector report a decline in gross NPAs to Rs 7,29,388 crore, as of March 2022.
  • Comparing between 2017-18 to the current FY 2021-22, the gross NPAs were 11.2 percent as compared to this year, which is at 5.9 per cent of the total, the report said.

So what happens when a loan is written off by the bank? When a bank/lender writes off a loan, the said amount moves out of the bank’s asset book and the lender reports the NPAs as loss. The primary reason for a lender to do so is if there is a very remote chance of the bank recovering the amount from the borrower.

  1. Writing off the loans is in some ways beneficial to the bank as apart from the fact that it would reduce its NPAs, it would also reduce taxes since the written off amount is allowed to be deducted from profit before tax.
  2. The reply from RBI said that public sector banks have reported to have the biggest share of write offs at Rs 7,34,738 crore, which is over 70 per cent of the entire amount.

Writing off NPAs is a regular banking process which is periodically carried out by lenders/banks for upkeep of their balance sheets. In previous records revealed earlier, banks wrote off Rs 2,02,781 crore of bad loans in the fiscal end of March 2021. In the past 10 years of write-offs, Rs 10.72 lakh crore write-off has happened since financial the year 2014-15.
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Will NPA affect credit score?

Minor and Major Defaults – The Devil is in the details. Customers would do well to understand the difference between minor and major defaults. Payments delayed or missed for a period of less than 90 days are considered minor defaults. As a result, your CIBIL score does take a permanent beating but is affected temporarily.

  • However, if you fail to make payments beyond 90 days, your account falls under the NPA (non-performing assets) category.
  • In case of major defaults such as this, lenders wouldn’t touch you with a bargepole.
  • In both scenarios (major and minor defaults), loan eligibility of a customer gets affected.
  • In case of a minor default, you can ensure that you pay subsequent bills in a timely manner to see your CIBIL score recover.

There is a view that a single payment delay will not have a huge negative impact on your CIBIL credit score provided you can make up for the time lag. However, it all boils down to the timing and the frequency of your missed payment. A couple of missed payments may only affect your score for a short period but if you don’t make a missed payment for six months and plan to apply for a loan, your chances of getting a loan approved are miniscule.
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Is NPA 90 days or 180 days?

According to the mandate by the Reserve Bank of India (RBI), loans can be classified as NPAs if they are overdue by more than 90 days.
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How do I recover my NPA loan?

There are various avenues for recovery of Non Performing Asset (NPA), they are Insolvency and Bankruptcy Code, the SARFAESI Act, Asset Reconstruction, Debt Recovery Tribunals, Lok Adalats.
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What is the rule of RBI for education loan?

April 28, 2001 RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 The Chairman/Managing Director All scheduled commercial banks Dear Sir Educational Loan Scheme The Finance Minister in a meeting with the Chief Executives of the public sector banks on 13 June 2000 had highlighted the role of commercial banks in facilitating pursuit of higher education by poor, but meritorious students. In pursuance thereof the Indian Banks’ Association constituted a Study Group under the chairmanship of Shri R.J.Kamath, Chairman and Managing Director of Canara Bank to examine the issue in detail. Based on the recommendations of the Study Group, a comprehensive model educational loan scheme was prepared by the Indian Banks’ Association for adoption by all banks. The Scheme aims at providing financial support from the banking system to deserving/meritorious students for pursuing higher education in India and abroad.The scheme was announced in the Union Budget for 2001-2002 and discussed in the meeting the Finance Minister had with the Chief Executives of banks on 7 April 2001.2. Government of India, Ministry of Finance, Department of Economic Affairs has considered and decided to accept the Model Scheme prepared by IBA for implementation, subject to the following modifications :

The condition of minimum qualifying marks in the last examination may be dropped.No margin may be insisted upon for loans upto Rs.4 lakh. However, for loans of higher amounts, the margin requirement may be 5% for inland studies and 15% for studies abroad.No security may be insisted upon for loans upto Rs.4 lakh. However, for loans above this amount, collateral security of suitable value or co-obligation of parents/guardians/third party alongwith the assignment of future income of the student for payment of instalments may be obtained. Loans upto Rs.4 lakh may be advanced at interest rate not exceeding PLR of the bank. Above Rs.4 lakh, the interest rate may be PLR + 1%.

3. We accordingly, forward herewith a copy of the model scheme prepared by IBA for implementation by banks after effecting the modifications indicated at to of para 2 above, at the earliest so that its benefits are available to students from this academic session itself.4.

  1. It is clarified that this Scheme is separate and in addition to and not in supersession of the scheme earlier circulated by RBI under Supreme Court orders vide our circular RPCD.SP.BC.10/09.07.01/99-2000 dated 31 st July 1999 issued to public sector banks.5.
  2. Please acknowledge receipt.
  3. Yours faithfully General Manager Encl : As above A MODEL EDUCATIONAL LOAN SCHEME 1.

INTRODUCTION: Education is central to the Human Resources Development and empowerment in any country. National and State level policies are framed to ensure that this basic need of the population is met through appropriate public and private sector initiatives.

  1. While government endeavour to provide primary education to all on a universal basis, higher education is progressively moving into the domain of private sector.
  2. With a gradual reduction in government subsidies higher education is getting more and more costly and hence the need for institutional funding in this area.

The scope of education has widened both in India and abroad covering new courses in diversified areas. Development of human capital is a national priority and it should be the endeavour of all that no deserving student is denied opportunity to pursue higher education for want of financial support.

  1. Loans for education should be seen as an investment for economic development and prosperity.
  2. Nowledge and information would be the driving force for economic growth in the coming years.
  3. The Hon’ble Finance Minister in a meeting with the Chief Executives of the Public Sector Banks on 13th June 2000 had highlighted the role of commercial banks in facilitating pursuit of higher education by poor, but meritorious students.

He also expressed the need to have a comprehensive educational loan scheme prepared that could be adopted by all banks. Accordingly, a study group under the Chairmanship of Shri R J Kamath, Chairman and Managing Director, Canara Bank was constituted to examine the issue in detail.

This model scheme has been prepared based on the recommendations contained in the report submitted by the group in August 2000.2. OBJECTIVES OF THE SCHEME : The Educational Loan Scheme outlined below aims at providing financial support from the banking system to deserving/ meritorious students for pursuing higher education in India and abroad.

The main emphasis is that every meritorious student though poor is provided with an opportunity to pursue education with the financial support from the banking system with affordable terms and conditions. No deserving student is denied an opportunity to pursue higher education for want of financial support.

In short, the scheme aims at providing financial assistance on reasonable terms: * to the poor and needy to undertake basic education. * to the meritorious students to pursue higher/ professional/ technical education.3. APPLICABILITY OF THE SCHEME: The scheme detailed below could be adopted by all Commercial Banks.

The scheme provides broad guidelines to the banks for operationalising the educational loan scheme and the implementing bank will have the discretion to make changes suiting to the convenience of the students/ parents to make it more customer friendly.

The scheme details are as under : 4. ELIGIBILITY CRITERIA : 4.1 Courses eligible a. Studies in India: * School education including plus 2 stage. * Graduation courses : BA, B.Com., B.Sc., etc. * Post Graduation courses : Masters & Phd. * Professional courses : Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc.

* Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to university. * Courses like ICWA, CA, CFA etc. * Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc. * Courses offered in India by reputed foreign universities.

  • Evening courses of approved institutes.
  • Other courses leading to diploma/ degree etc.
  • Conducted by colleges/ universities approved by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc.
  • Courses offered by National Institutes and other reputed private institutions.
  • Banks may have the system of appraising other institution courses depending on future prospects/ recognition by user institutions.b.

Studies abroad :- * Graduation : For job oriented professional/ technical courses offered by reputed universities. * Post graduation : MCA, MBA, MS, etc. * Courses conducted by CIMA- London, CPA in USA etc.4.2 Student eligibility : * Should be an Indian National * Secured admission to professional/ technical courses through Entrance Test/ Selection process.

  • Secured admission to foreign university/ Institutions.
  • Should have scored minimum 60% (50% for SC/STs) in the qualifying examination for admission to graduation courses.4.3 Expenses considered for loan : * Fee payable to college/ school/ hostel.
  • Examination/ Library/ Laboratory fee.
  • Purchase of books/ equipments/ instruments/ uniforms.

* Caution deposit/ building fund/ refundable deposit supported by Institution bills/ receipts. * Travel expenses/ passage money for studies abroad. * Purchase of computers – essential for completion of the course. * Any other expense required to complete the course – like study tours, project work, thesis, etc.5.

Upto Rs.2 lacs : Nil
Above Rs.2 lacs : Studies in India : 15%
: Studies Abroad : 25%

Scholarship/ assistantship to be included in margin. – Margin may be brought-in on year-to-year basis as and when disbursements are made on a pro-rata basis.7. SECURITY :

Upto Rs.2 lacs : No security
Above Rs.2 lacs : Collateral security equal to 100% of the loan amount or guarantee of third person known to bank for 100% of the loan amount.

Note:- * The document should be executed by both the student and the parent/ guardian. * The security can be in the form of land/ building/ Govt. securities/ Public Sector Bonds/ Units of UTI, NSC, KVP, LIC policy, gold, shares/ debentures, bank deposit in the name of student/ parent/ guardian or any other third party with suitable margin.

Wherever the land/ building is already mortgaged, the unencumbered portion can be taken as security on II charge basis provided it covers the required loan amount. * In case the loan is given for purchase of computer the same to be hypothecated to the Bank. Banks who wish to support highly meritorious/ deserving students without security may delegate such powers to a fairly higher level authority.8.

RATE OF INTEREST :

Upto Rs.2 lacs : PLR
Above Rs.2 lacs : PLR + 1%

The interest to be debited quarterly/ half yearly on simple basis during the Repayment holiday/ Moratorium period. * Penal interest @ 2% be charged for above Rs.2 lacs for the overdue amount and overdue period.9. SANCTION/ DISBURSEMENT : * The loan to be sanctioned as per delegation of powers preferably by the Branch nearest to the place of domicile.

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Repayment holiday/Moratorium : Course period + 1 year or 6 months after getting job, whichever is earlier.

The loan to be repaid in 5-7 years after commencement of repayment. If the student is not able to complete the course within the scheduled time extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course. * The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Instalments (EMI) fixed. * 1-2% interest concession may be provided for loanees if the interest is serviced during the study period when repayment holiday is specified for interest/ repayment under the scheme.11. FOLLOW UP: Banks to contact college/ university authorities to send the progress report at regular intervals in respect of students who have availed loans.12. PROCESSING CHARGES : No processing/ upfront charges may be collected on educational loans.13. CAPABILITY CERTIFICATE : Banks can also issue the capability certificate for students going abroad for higher studies. For this financial and other supporting documents may be obtained from applicant, if required. (Some of the foreign universities require the students to submit a certificate from their bankers about the sponsors’ solvency/ financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies.) 14. OTHER CONDITIONS: No due certificate need not be insisted upon as a pre-condition for considering educational loan. However, banks may obtain a declaration/ an affidavit confirming that no loans are availed from other banks. Loan applications have to be disposed of within a period of 15 days to 1 month, but not exceeding the time norms stipulated for disposing of loan applications under priority sector lending. In order to bring flexibility in terms like eligibility, margin, security norms, banks may consider relaxation in the norms on a case to case basis delegating the powers to a fairly higher level authority.

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What is the time limit for NPA?

RBI extends deadline for NBFCS to meet new NPA upgradation norms Agencies The RBI also clarified that loans classified as NPA will be upgraded to standard category only if all dues are paid. The on Tuesday extended the timeline by six months for to adhere the new recognition norms. Earlier the regulator had set March 31 deadline for non-bank lenders to upgrade NPAs only after all arrears and principal dues are paid.

“NBFCs will have time till September 30, 2022 to put in place the necessary systems to implement this provision,” the regulator said. The also clarified that loans classified as NPA will be upgraded to standard category only if all dues are paid. “In case of borrowers having more than one credit facility from a lending institution, loan accounts shall be upgraded from NPA to standard asset category only upon repayment of entire arrears of interest and principal pertaining to all the credit facilities,” the RBI said.

The new RBI rules require NBFCs to treat such accounts as NPA until the borrower updates the account by paying all the EMIs due. The banking sector follows an automated system for tagging accounts as NPAs, under which the accounts are tagged as NPAs on the day the account becomes overdue for more than 90 days.

However, in many NBFCs, this classification is made after the end of 90 or 180 days. In general, many non-bank lenders upgrade NPAs as overdues in the accounts reduced to less than 90 days, while do not upgrade an NPA until all the overdue amounts are collected. With these changes, the norms have been made largely congruent between banks and NBFCs.

(Catch all the, Events and Updates on,) Download to get Daily Market Updates & Live Business News. : RBI extends deadline for NBFCS to meet new NPA upgradation norms
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Does education loan have foreclosure charges?

Plan To Repay –

In case of SBI Student loans, repayment will start after the completion of course period and moratorium period (Repayment commences one year after the course completion or 6 months after securing a job, whichever is earlier). The Loans are sanctioned as Term Loans and to be repaid in EMIs over a maximum repayment term of 15 years (180 EMIs) for Student, Scholar and Global Ed-vantage Education Loans. The repayment of EMI starts 12 months after the completion of the course or 6 months after getting the employment, whichever is earlier for Student and Scholar Loan Schemes. In case of Global Ed-Vantage Loans, repayment of EMI starts 6 months after the completion of the course. The accrued interest during the moratorium period and course period is added to the principle and repayment is fixed in Equated Monthly Installments (EMI). If full interest is serviced before the commencement of repayment; EMI is fixed based on principle amount only. There are NO penalty charges for prepayment. You can prepay your education loan anytime.

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What is an NPA in education?

A nonpublic, nonsectarian agency (NPA) is a private, nonsectarian establishment or individual that provides related services necessary for a pupil with exceptional needs to benefit educationally from the pupils’ individualized education program (IEP).
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What happens after 7 years of not paying student loans?

Will a default stay with me forever? – don’t always stay on your record forever. Normally, defaulted private student loan debt will fall off your credit report seven and a half years after the date of the first missed payment. Defaulted federal student loans either fall off seven years after the date of default, or seven years after the date the loan was transferred from the Federal Family Education Loan Program (FFEL) to the Department of Education.

  • But, and I cannot stress this enough, this is not a get out of jail free card.
  • You still owe that money and if, for example, the student loan is transferred, it will reappear on your credit report.
  • Not to mention that you can still be taken to court and chased by debt collectors.
  • And if you’ve taken out a Federal Perkins Loan – a need-based student loan from the Department of Education – that puppy can follow you for darn near forever.

It will not budge from your credit report as long as there is a balance due. The only way to exorcise a Perkins Loan (and in truth, any loan) is to pay it off or consolidate it. I can only surmise that our friends from Iowa had the misfortune of carrying Perkins loans, and will possibly carry them to their graves.
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Do unpaid student loans go away after 7 years?

How long will an unpaid student loan stay on my credit report? – Private and federal student loans will likely appear on your credit report with each of the “Big 3” credit companies: TransUnion, Experian, and Equifax. A “trade line” will appear on your credit report for each loan you took.

  • Total balance owed
  • Your payment history
  • The origination date of the loan
  • The company reporting the debt

Typically, a defaulted debt, including student loan debt, will be taken off your credit report 7 years from the date of the first missed payment. However, it is essential to understand that the 7 year period applies to federal student loans from the date of default OR from the date the loan was transferred from the guarantor of a Federal Family Education Loan (FFEL) to the Department of Education.
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What is an NPA in education?

A nonpublic, nonsectarian agency (NPA) is a private, nonsectarian establishment or individual that provides related services necessary for a pupil with exceptional needs to benefit educationally from the pupils’ individualized education program (IEP).
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What type of loan is education loan?

Education loans are basically a form of monetary assistance availed by students to meet the expenses associated with their studies. Education loans can be taken by means of funding, scholarships, financing and rewards, and are granted in cash, which has to be repaid to the lender along with a rate of interest.

  • Students who wish to avail education loans are advised to borrow based on their needs as the repayment periods for these loans can vary to a great extent depending upon the lender and the amount borrowed by the student.
  • Most of the student loans available to individuals in India are granted at a relatively low rate of interest, and interest payments need not be made immediately.

Students are usually granted a period of time before from the time they take the loan to the time they start making repayments. Education loans are unsecured loans that can be used to cover expenses related to education, such as tuition fees, books, living expenses and other such expenses as transportation costs, etc.
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What is included in NPA?

Suggest a new Definition Proposed definitions will be considered for inclusion in the Economictimes.com Definition: A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.

  1. Description: Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.1.
  2. Substandard assets: Assets which has remained NPA for a period less than or equal to 12 months.2.
  3. Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.3.

Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.” Also See: Foreign Exchange Reserves, Balance of Payment, Base Rate Watch the video here:
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What are the three categories of NPA?

What are the categories of NPA? Check Answer at BYJU’S The 3 different categories of Non Performing Assets (NPA’s) are Loss Asset, Doubtful Asset, Substandard Asset. When the amount has not been written off wholly but loss has been identified by the RBI, or external auditor, or internally by the bank, then this asset is classified as a loss asset.
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