Government of India
Ministry of Human Resource Development
Department of Higher Education
Central Scheme to provide Interest Subsidy for the period of moratorium on
Educational Loans taken by students from economically weaker sections from
scheduled banks under the Educational Loan Scheme of the Indian Banks’
Association to pursue technical/professional education studies in India.
One of the major concerns of the Government is to ensure that nobody is
denied professional education because he or she is poor. The Indian Banks’
Association (IBA) had formulated a comprehensive model educational loan scheme
for adoption by all Banks, aimed at providing financial support from the banking
system to deserving/meritorious students for pursuing higher education in India and
abroad. Government of India has now approved a Scheme to provide full interest
subsidy during the period of moratorium on loans taken by students belonging to
economically weaker sections from scheduled banks under the Educational Loan
Scheme of the Indian Banks’ Association, for pursuing any of the approved courses of
studies in technical and professional streams, from recognized institutions in India.
2. The broad parameters of the Scheme are :-
(i) The Scheme would be only applicable for studies in technical and professional
courses in India. The interest subsidy shall be linked with the existing Educational
Loan Scheme of IBA and restricted to students enrolled in recognized professional
courses (after Class XII) in India in Educational Institutions established by Acts of
Parliament, other Institutions recognized by the concerned Statutory Bodies, Indian
Institutes of Management (IIMs) and other institutions set up by the Central
(ii) Under the Scheme, interest payable by the student availing of the Educational
Loan Scheme of the Indian Banks’ Association for professional courses for the period
of moratorium (i.e., course period, plus one year or six months after getting job,
whichever is earlier) as prescribed under the Educational Loan Scheme of the Indian
Banks’ Association, shall be borne by the Government. After the period of moratorium is over, the interest on the outstanding loan amount shall be paid by the
student, in accordance with the provisions of the existing Educational Loan Scheme
and as may be amended from time to time.
* (iii) The benefits under the Scheme would be applicable to those students
belonging to economically weaker sections, with an annual parental income upper
limit of Rs. 4.5 lakh per year.
(iv) The interest subsidy under the Scheme shall be available to the eligible
students only once, either for the first undergraduate degree course or the post
graduate degrees/diplomas. Interest subsidy shall, however, be admissible for
combined undergraduate and post graduate courses.
(v) Interest subsidy under this scheme shall not be available for those students who
either discontinue the course midstream, or for those who are expelled from the
Institutions on disciplinary or academic grounds. However, the interest subsidy will
be available for the actual period of study, only if the discontinuation was due to
medical grounds for which necessary documentation to the satisfaction of the Head
of educational institution will have to be given.
(vi) There would be a tag/marker on the degree of the student indicating his
(vii) The National Minorities Development & Finance Corporation (NMDFC) has
an Educational Loan Scheme for individual beneficiaries, which is implemented
through State Channelizing Agencies (SCAs). The National Safai Karamcharis
Finance and Development Corporation under the Ministry of Social Justice and
Empowerment also provides educational loan to the students of the target group for
higher education. Interest on Educational Loan provided under these two schemes, if
the loans are for pursuing professional courses after XII class, shall also be subsidized
for the period of moratorium as per the terms and conditions of this Scheme.
(viii) The Scheme shall be implemented through Canara Bank, which is the nodal
bank for the Ministry of Human Resource Development. Modalities for implementation and monitoring mechanism shall be finalized in consultation with the
(ix) The Scheme shall be applicable from the academic year 2009-10.
(x) A list of professional courses for which the scheme shall be applicable, shall
be brought out, in consultation with the concerned Ministries/Departments and the
Indian Banks’ Association, and publicised from time to time.
** (xi) A monitoring mechanism shall be evolved to monitor the benefits
accruing to different categories of loanees, such as, the Scheduled Castes, Scheduled
Tribes, Minorities, Disabled etc.
* Income proof shall be required from the students from such public authorities as are
authorised by the State Governments for certification of income status for various
purposes, including Central and State Sector Schemes.
** For better statistical reference and collation of data, information pertaining to
beneficiaries shall be maintained in respect of the categories to which they belong,
namely, Scheduled Castes, Scheduled Tribes, Minorities, Other Backward Classes,
and Others; alongwith sub-classification in terms of gender, differently-abled/ persons
with disabilities as well as the disciplines/programmes of study, year of enrolment
and programmes as also the specialisation of study, institutions, locations, State-wise
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