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What is interest subsidy scheme for education loan?

What is interest subsidy scheme for education loan?


It is a Government of India scheme known as Central Scheme to provide Interest Subsidy (CSIS) for the EWS students to pursue Technical/ Professional education studies in India.  This scheme is independent of any other schemes which may cater to Economically Weaker Sections.

 Under the scheme the interest payable on education loan by the students belonging to Economically Weaker Section (EWS) will be borne by the Government of India during moratorium period.  The moratorium period means Course Period plus one year or six months after getting job, whichever is earlier, as prescribed under the Model Educational Loan Scheme formulated by the Indian Banks’ Association (IBA). 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 of Banks and as may be amended from time to time. The scheme is effective from the academic year 2009-10.

Eligibility for subsidy: The eligibility for subsidy is restricted to following students;

  • Students whose annual parental family income from all sources is below Rs.4.50 lakhs are only eligible under the scheme.Icome proof shall be required from the students from such public authorities which are authorised by the State Governments for certification of income status for this Scheme,including Central and State Sector Schemes.
  • The students who have enrolled in recognised Technical/Professional Courses (after Class XII) in India in Educational Institutions established by Acts of Parliament, other Institutions recognised by the concerned Statutory Bodies, Indian Institutes of Management (IIMS) and other institutions set up by the Central/State Government.
  • 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 in India. Interest Subsidy shall, however, be admissible for integrated courses (graduate+post graduate).

Non eligibility: Interest subsidy shall not be available for the following student borrowers,

  • Those students once they discontinue the course midstream, or who are expelled from the Institutions on disciplinary or academic grounds. However, subsidy will be available 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.
  • Non Professional and Non- Technical under Graduate and Post Graduate courses in Arts, Science, Commerce, Sociology, Music etc., Diploma Courses, Teacher Training Courses, Skill Development, Vocational Training courses etc. are not eligible under the above scheme. Studies in institutions abroad, courses pursued without completing class XII are also not eligible.

Nodal Bank: The Scheme shall be implemented through Canara Bank, which is the Nodal Bank for the scheme. However, the student can apply under the scheme only through branch where educational loan is availed.

Who are the lenders under this scheme?: lnterest subsidy scheme is available to students belongingto EWS for availing  Educational loan schemes of scheduled Banks, NMDFC, NSKFDC, NBCFDC, NSCFDC and NHFDC .Theinterest charged by NMDFC, NSKFDC, NBCFDC, NSCFDC and NHFDC are to be paid by Government direct to the respective Corporations.

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