Credit guar­an­tee scheme

Consumer Voice - - Bfsi/ For Higher Studies Abroad -

loan sanc­tion with­out de­lay. o Stud­ies in In­dia up to Rs 10 lakhs o Stud­ies abroad up to Rs 20 lakhs Loans (CGFSEL) has been es­tab­lished to guar­an­tee ed­u­ca­tion loans sanc­tioned by mem­ber banks (for a nom­i­nal fee to be paid by the mem­ber banks ev­ery year to keep the guar­an­tee afloat). Cor­pus con­tri­bu­tion to the fund shall be made upfront by the set­tler – that is, the govern­ment of In­dia – on an an­nual ba­sis. In case of de­fault and in­vo­ca­tion of claim, the Fund shall set­tle the claims of the lend­ing in­sti­tu­tion af­ter due dili­gence and the lat­ter shall be paid on claims filed by them to the ex­tent of 75 per cent of the loan amount.

Ed­u­ca­tion loans for higher stud­ies in In­dia as well as abroad have not had the de­sired growth amongst In­dian stu­dents for var­i­ous rea­sons, chief among them be­ing banks’ te­dious pro­ce­dural wran­gles and de­lays, thereby hold­ing up their ad­mis­sions to the pre­ferred in­sti­tu­tions.

In or­der to bring in sim­pli­fied norms of lend­ing cou­pled with stricter mon­i­tor­ing of un­cer­ti­fied ed­u­ca­tional in­sti­tutes, the govern­ment of In­dia has brought out a no­ti­fi­ca­tion (dated 16.09.2015) to es­tab­lish Credit Guar­an­tee Fund Scheme for Ed­u­ca­tion Loans (CGFSEL). Banks are ex­pected to in­crease their loan vol­ume and num­bers in ex­tend­ing ed­u­ca­tion loans to needy stu­dents for pur­su­ing fur­ther stud­ies in In­dia and abroad.

Salient fea­tures of the scheme are briefly ex­plained here: Loan limit: The max­i­mum loan al­lowed is Rs 7.50 lakhs with­out any col­lat­eral se­cu­rity and third-party guar­an­tee. Rate of in­ter­est: The ed­u­ca­tion loans to be cov­ered un­der this fund shall at­tract loan in­ter­est @ 2% above the base rate of the banks. Mar­gin: For loans up to Rs 4 lakhs: nil; for loans above Rs 4 lakhs: 5 per cent for stud­ies in In­dia and 15 per cent for stud­ies abroad Guar­an­tee: Na­tional Credit Guar­an­tee Trustee Com­pany ( NCGTC) un­der­takes to pro­vide guar­an­tee against de­fault in re­pay­ment of ed­u­ca­tional loans up to Rs 7.50 lakhs ex­tended by the lend­ing in­sti­tu­tion. How­ever, the guar­an­tee is avail­able only against ed­u­ca­tional loans on which the req­ui­site guar­an­tee fee has been paid by the lend­ing in­sti­tu­tion from time to time. Also, the fund shall pro­vide guar­an­tee cover to the ex­tent of 75 per cent of the amount in de­fault.

Prob­lem Points

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