J&K Bank gives more concessions in educational loan to its state students

In J&K state the education sector is lacking behind in state affairs. The literacy rate is very disappointing; according to figures it is the third lowest with 55.52%, after Bihar and Jaharkhand as against all India rates of 65%. Even though in state the educational facilities have expanded considerably but the literacy rate has failed to keep up with the pace with the passing time.

In fact the gender wise also the gap in literacy continues as high as 23.6%. Precisely, there are lots of evident deficiencies, which have contributed a lot to the mess in the state’s education sector.

In the midst of this scenario, there is one more fact that there has been a considerable improvement in indicators like enrolment ratio, reduction in drop out rate retention etc. But for most of the parents it is very difficult to impart higher education to their children due to increasing cost of education. Even though there is educational loan scheme to meet the financial requirements to help students to pursue higher education but the ceiling in the scale of finance has broken the dreams of students.

However a traditional educational loan scheme with almost uniform features is available with all the banks. But, J&K Bank has move forward by taking up certain initiatives to improve upon the educational loan scheme, which was introduced in 1998, so that students in the state don’t suffer because of unavailability of finances to pursue higher education. Not only the ticket size of the loan scheme has been improved, new courses have been added over the years and all these have been brought under the ambit of the scheme. More provisions have been added to give relaxations to the students while obtaining loan under the scheme.

The revised scheme has given a big relief to the student’s community, as the ceiling on the quantum of finance has been increased from Rs.7.50 Lacs to Rs.10 Lacs for studies in India whereas for studies abroad, the loan limit has been increased by Rs. 5 Lacs, from Rs.15 Lacs to Rs.20 Lacs.

Usually, after taking loan under the scheme, the borrowers have to repay the loan after completing the study. Though there is a repayment holiday of course period and one year or 6 months after getting job, whichever is earlier? After that, the loan has to be repaid in 5-7 years. Moreover it is mandatory for the borrower to pay the accrued interest monthly during the repayment holiday period.

But under the revised scheme, the borrower has an option. The accrued interest during the repayment holiday period will be added to the principal loan amount and will be loaded in the Equated Monthly Installments (EMI) fixed by the bank, which means, the borrower doesn’t have to make repayment during the study period. Yet, the borrower can earn a concession of one per cent in rate of interest, in case he decides to repay the accrued interest monthly during the study period.

Under the revised scheme the range of interest rate is 10.50% to 14.50% depending upon the quantum of loan. And during the repayment holiday, the borrower could be charged simple interest.

Further concessions have been introduced in the scheme for talented students pursuing courses in IIT, IIM, and Indian school of Business, Hyderabad will not have to give tangible collateral security for loans up to Rs.10.00 Lacs. As well, a concession of 0.50% in the rate of interest will be allowed for students pursuing their degrees from these institutes. While for others loans above Rs.7.50 Lacs will be given against the tangible collateral security of suitable value.

The regular Degree/Diploma courses like Aeronautical, pilot training, shipping etc., approved by Director General of Civil Aviation/Shipping have also been included in the scheme. In addition, courses offered in India by reputed foreign universities, evening courses of approved institutes and computer certificate courses of reputed institutes accredited to Department of Electronics or institutes affiliated to university have also been taken under the ambit of the scheme. The scheme has also included provisions for employed persons who intend to improve their educational qualification and /or to receive training in modern technology in India or abroad, can also be assisted under the scheme given the education / training received by them offer prospects of their better employment.

Other expenses such as travel expenses/ passage money for studies abroad, insurance premium for student borrower and any other expense required to complete the course - like study tours, project work, thesis, etc, will also be covered by the loan. In the normal conditions, the bank while evaluating the loan will look into the future income prospects of the student. But, where required, the resources of parent or guardian could also be taken into account to evaluate re-payment capability.

In some of the foreign universities there is a requirement that the students need 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. Banks can issue such capability certificates after the applicant submits financial and other supporting documents to ascertain the capability / solvency. The banks will dispose the loan applications within a period of one month.

For primary education, the Bank has designed a loan scheme - Budshah Primary Education Loan scheme. The scheme has been designed to provide a financial cushion for parents so that then can provide even Pre- Primary schooling to their children studying in nursery, lower kindergarten and upper kindergarten. In addition, scheme will also cater to the needs of students pursuing B Ed and M Ed courses.