Canara Bank Education Loan

Canara Bank Education Loan

Canara Bank was founded in 1906 as Canara Bank Hindu Permanent Fund at Mangalore, Karnataka, by late Shri Ammembal Subba Rao Pai, a philanthropist. It was then grown into a limited company as Canara Bank Ltd. in 1910. Later in 1969, it was renamed to Canara Bank after nationalization. Effectual founding principles, enlightened leadership, unique work culture and extraordinary adaptability to the dynamic environment have made Canara Bank be a frontline banking institution of global standards.

Canara net banking service was launched in 2004 with 100% Branch computerization. The highest dividend paid to the shareholders was in 2012-13 that was 130%. By 2016, the network crossed 6000 branches across the world. It has several firsts to its credit such as Launching of Inter-City ATM Network, Obtaining ISO Certification for a Branch, Issuing credit card for farmers, Providing Agricultural Consultancy Services and so on. Today, Canara Bank holds a premier place in the comity of Indian banks.

Canara Bank has launched a variety of education loans namely Vidya Turant, Vidya Sahay, Education Loan under IBA Model, Model Loan Scheme for Vocational Education and Training. There are a lot of key factors which you will see that attracts the students towards Canara Bank.

  1. What is Education Loan?
  2. Education Loan without Collateral
  3. Education Loan interest rate in India
  4. Canara Bank Education Loan Schemes
    1. IBA Model Education Loan scheme
    2. Model Loan Scheme 
    3. Canara Bank Vidya Sahay Scheme
    4. Vidya Turant
  5. Education Loan Repayment Support Scheme
  6. Canara Bank Education Loan for Abroad Studies
  7. Canara Bank Education Loan Interest Rate
  8. Canara Bank Customer Care/ Toll-free number
  9. Canara Bank Customer Service

What is Education Loan?

An education loan is an amount borrowed to finance college or other school-related expenses. Education loans are issued for the purpose of attending an academic institution and pursuing an academic degree. Payments are often deferred while students are in school and for a six-month grace period after graduation. Education loans can be obtained from the government or through private-sector lending sources such as banks and other financial institutions. Federal loans often offer subsidized interest and some also offer lower interest rates, unlike private-sector loans.

Education loans have become the necessary support system for students who cannot afford education due to their current financial situations.

Educational Loan without Collateral

According to RBI, the maximum study loan for education in the domestic country is INR 10 lakhs and for studying abroad, it is INR 20 lakhs. 

The guidelines laid down show that loan taken up to Rs.4 lakhs is allowed without any collateral security and when the loan amount exceeds, the rule is to have collateral and a third party guarantee which is most cases is the parents of the student. Collateral is a necessary constraint for the banks to stay on the safer side. If a long and bigger amount is taken without collateral, it might turn out to be a loss for the bank. In order to avoid that loss, collateral for loan exceeding Rs.4 lakhs is required.

Only in rare special cases, when the student is extraordinary and deserving, the bank might consider exceeding his/her limit of study loan without any collateral.

No collateral is required for a student loan at Canara Bank up to INR 4 Lakhs.

Education loan interest rate in India

With more and more Indians choosing to pursue their education abroad, banking and lending institutions are keen on providing the best possible financing options to suit every student’s needs. Financing higher education in a foreign country is generally a gigantic task for any middle-tier family in India. Along with regular tuition fees of the students, their families also have to bear boarding and lodging costs, books, travel and other related expenses for the student. Lending institutions have proved to be a savior in this case, through education loans which are generally given out by banks at attractive and affordable interest rates to finance higher studies in reputed institutions abroad. Education loans generally cover a vast number of expenses inclusive of fees, equipment, books, hostel fees, travel, examination fees, etc., for students.

Under Graduate education loan - These are given to students who have completed their secondary education and looking to do higher studies in the form of under graduation. It can be done in India or abroad.

Postgraduate education loan - These are education loans given to individuals who want to pursue post-graduation after completing under graduation course from a reputed university/college. Here also the loan can be for studying in India or abroad.

Parents availing education loan - This is the case where the parents take a loan for the educational purposes of their children. This is an unsecured loan and need not be for graduate or post-graduation courses but also for elementary and higher secondary courses.

Career growth education loans - These are loans provided to young people who want to pursue courses or training, certifications that will benefit their career growth.

Education Loan also covers studies in India as well, with students opting for either graduation or post-graduation courses. Generally, education loans are offered in specific categories:

a) Below Rs.4 lakhs (collateral not needed)

b) Between Rs.4 lakhs and Rs.7.5 lakhs

c) Above Rs.7.5 lakhs.

Canara Bank education loan interest rate is 9.95%, both for domestic countries and abroad.

Canara Bank Education Loan Schemes

Canara Bank is one of the largest public-sector banks in India. It is headquartered in Bangalore, India. It has been providing services to people since 1906. It has its operations worldwide. It has 3,212 branches all around the world. The bank also has around 2,150 ATM’s.

The main purpose of the provision of Canara bank education loan is to help students with the payment of tuition fees, to purchase the books required, course material, instruments, uniform if required, payment of hostel fees, examination fees, and also to cover travel and passage expenses in cases of abroad studies.

IBA Model Education Loan scheme

The Indian Banks Association (IBA) has put in place a standardized model educational loan scheme to be implemented by all nationalized banks across the country. The main objective of this exercise is the provision of financial support from the banking sector to the deserving and meritorious students for pursuing higher education in India and abroad. This article covers all the Canara bank education loan details.

Courses Covered and Eligibility   

Here is a list of the courses covered under the scheme and eligibility.

  • For courses in India, courses such as under graduation courses, post-graduation courses inclusive of the technical and professional courses that have the potential of employment are eligible.

  • Courses conducted by colleges or universities which are approved by the University Grants Commission (UGC), the state or the central Government, the All India Council for Technical Education(AICTE), IMC, or autonomous institutions like IIM, IIT, etc. are considered eligible.

  • For courses abroad, it is necessary for the course chosen to be either job-oriented, technical or professional courses. It can either be a graduate course or a post-graduation course.

Loan Amount and Margin

Given below is the loan amount and margin for various courses.

  • The maximum amount of loan given for courses in India is Rs.10 Lacs and for courses abroad, it is Rs.20 Lacs.
  • If the borrowed amount is below Rs.4 lacs there will be no margin charged.

  • If the amount is above Rs.4 Lacs for courses in India then the margin charged is 5%.

  • For the courses in abroad and the amount borrowed is more the Rs.4 Lacs, the margin is 15%.

  • For the loans below Rs.4 Lacs, no security will be asked, however, for the loan amount above Rs.4 Lacs and below Rs.7.5 Lacs a third-party guarantee is required.

  • For amount above Rs.7.5 Lacs, a 100% collateral is required.

Repayment of IBA Model Education Loan scheme

Here are the guidelines for the repayment of IBA Model Education Loan Scheme.

  • The repayment commences after 6 months or 1 year after the completion of the course.

  • For amounts below Rs.7.5 Lacs, the repayment period is 10 years.

  • For amounts above Rs.7.5 Lacs, the repayment period is 15 years. 

Model Loan Scheme

A revised Model Educational Loan Scheme (2015) for pursuing higher education in India & abroad was formulated by IBA and circulated to member banks for adaption and implementations. The latest important information with respect to Canara Bank Model Scheme Loan is provided below.

Student Eligibility

Given below is the criteria for student eligibility for the Model Loan Scheme.

  • The student should be an Indian national.

  • The student should have passed class 10.

  • The student should have secured admission in a course which is conducted by the ministry, department of Central/State Government or an Organization recognized and authorized by the Government to conduct courses.

Courses Eligibility

Only the below-mentioned courses are eligible for the scheme.

  • The courses should be development courses which can be completed in the duration from 2 months to 3 years.

  • It is preferred if the course leads to other certificate courses, diploma courses or degree courses.

  • The institute conducting this course should be authorized and recognized by the Government.

Loan Amount and Margin

Given below is the loan amount and margin for various durations.

  • For courses of duration up to 3 months - Rs.20,000/-

  • For courses of duration 3-6 months - Rs.50,000/-

  • For courses of duration 6 months to 1 year - Rs.75,000/-

  • For courses of duration above 1 year - Rs.1,50,000/-.

  • There is no margin charged on this loan and no security has to be produced either.

Repayment of Model Loan

Here are the guidelines regarding the repayment of Canara Bank education loan.

  • For the courses that will be completed before a year, the repayment period commences after 6 months.

  • For the courses that require more than 1-year for completion, the repayment period commences after 12 months or a year.

  • Courses up to 3 months - In 2 to 5 years

  • Courses up to 3 to 6 months - In 2 to 5 years

  • Courses 6 months to 1 year - In 2 to 5 years

  • Courses above 1 year - In 3 to 7 years.

Canara Bank Vidya Sahay Scheme

Vidya Sahay is designed for assisting the needy and meritorious students who are in need of funds that have to be paid to the CET/counselling Authorities at the time of selection.

Eligibility

Here are the eligibility criteria for students who want to avail the Canara Bank Vidya Sahay Scheme.

  • The students who have written the in Common Entrance Test (CET) which is conducted by respective state governments, CBSE, IIT and such other all India examination and have been selected for counselling are eligible

  • The students should be of Indian National.

  • The students should have successfully completed the qualifying exam.

  • Address and ID Proof to be provided at the time of sanction of Bridge Loans for complying with KYC norms.

Loan Amount and Margin

Following is the loan amount and margin for the Canara Bank Vidya Sahay Scheme.

  • The maximum eligible amount would be Rs.1 Lakh or initial payment as proposed by the CET Authorities whichever is less

  • There is no marginal charge.

  • There is no security required.

Repayment

This bridge should be cleared immediately after the education loan is sanctioned.

Vidya Turant

This loan is designed to assist the needy and meritorious students who are in need of education loans and are pursuing their higher studies in select reputed institutions such as IIMs/IITs/NITs/IISc /ISB (Hyderabad & Mohali) and other reputed institutes.

Eligibility to avail Vidya Turant Education Loan

Here the eligibility criteria to avail Vidya Turant Education Loan.

  • The candidate should be an Indan Citizen.

  • The candidate must have cleared the previous qualifying exam conducted by the competent authorities.

  • Admission to premier Institutes viz. IIMs, IITs, NITs, IISc, and other such institutes.

Loan Limits

This table is designed in order to give you an overview of the loans and limit for students from different financial institutions, under the Vidya Turant Educational Loan.

Quantum of Finance 

Category

Institutions

Limit eligible 

A.

Students of IIMs.

Limit up to Rs 25.00 Lacs.

B.

Students of ISB, Hyderabad & Mohali

Limit up to Rs 36.00 Lacs.

C.

All other institutions other than  A and B

Limit up to Rs 20.00 Lacs.

  • The loan has to be paid back within 15 years irrespective of the amount borrowed.

  • There is no security required for loans for certain universities or institutions.

  • The MCLR interest is 0.20%.

  • A concession of 0.50% will be given to female students.

Security/Collateral required for Vidya Turant Loan

Following is the security or collateral required for Vidya Turant Loan of Canara Bank.

  • No Security is required up to limits for institutions designated category wise. ie IIMs Limits up to Rs 25.00 lacs, ISB Limits up to Rs 36.00 Lacs, all other institutions Limits up to Rs 20.00 Lacs.

  • Parent/guardian will have to join as Co-borrower.

  • Assignment of future income of the student is required

Education Loan repayment support scheme

In order to make educational loans easily accessible and affordable for each and every student, many tax benefits and an attractive government interest subsidy scheme are available in India. Some of the key benefits of this subsidy are:

  • Interest paid on education loan for study can be claimed as deduction under Section 80E of the Income Tax Act, 1961. The entire interest paid (without any limit) on the education loan is tax-deductible under Section 80E of the Income Tax Act. A tax deduction reduces the effective rate of interest on education loan by almost 250-400 basis point, thus bringing the effective interest rate to as low as 9.5 %
  • The Central Government of India has launched an Interest Rate Subsidy scheme for Education Loan for students belonging to Economically Weaker Sections (EWS) of the society. Under this scheme, the Government of India shall provide full interest subsidy during the period of the moratorium which is defined as Course Period plus one year or six months after getting a job. The student will need to furnish documentary evidence of the gross annual income of the family of the student together from all sources that do not exceed Rs 4.5 lakh. The interest subsidy under the Scheme is available to eligible students only once during their lifetime. The subsidy is available for first undergraduate degree course or first post-graduate degree diploma courses in India and is also admissible for integrated courses, that is, graduate plus postgraduate. Canara Bank is the nodal bank for implementation of the scheme. The Scheme is applicable from the academic year 2009-10 starting 1st April 2009 and hence, the loan amount taken starting from the Academic Year 2009-10 are covered under the Interest Subsidy Scheme.
  • RBI has classified education loans as 'priority sector lending' under which banks are compulsorily required to lend 40% of their incremental advances to sectors that come under priority sector lending. Banks are under constant pressure to meet their priority sector lending targets and hence, often charge a relatively lower interest rate on these loans as compared to other commercial loans. This acts as an indirect subsidy to make student loans available at cheaper rates of interest.

Canara Bank Loan for Abroad Studies

Abroad Studies as mentioned earlier is covered under the IBA Model Education Loan scheme and Model Loan Scheme For Vocational Education And Training schemes respectively.

The processing charge levied on loans procured to study abroad is 1% of the total loan amount. One successful repayment of the loan by the candidate, this amount will be reimbursed.

The Canara bank education loan amount will be directly disbursed off to the university or institute in question. There is no margin for the candidates who take an education loan for up to Rs. 4 lakh. The margin for the candidates who take a loan for above Rs. 4 lakh is 15%. 

Canara Bank Education Loan Interest Rate

Canara Bank takes nil margins and offers 100% finance for loans up to Rs 4 Lakh. It allows multiple co-borrowers for the loan in order to procure the maximum loan. Loans up to Rs 4 lakh are available without collateral and up to Rs 7.5 lakh with third party guarantee. And loans above Rs 7.5 lakh can be availed by submitting the adequate collateral asked for.

For all loan types and amounts, the average interest rate is in the range of 9.90% and 10.70%. The specific interest rates and details for the 4 education loans offered by the bank have been tabulated below.

Canara Bank Education Loan Interest Rate
For Vidhya Turant Loan Scheme 6.6%
Up to Rs. 4 Lakhs 10.40%
Rs. 4 Lakhs to Rs. 7.50 Lakhs 10.40%
Loans above Rs. 7.50 Lakhs 10.40%

Canara Bank Customer care/ Toll-free Number

For any query related to education loan or any other details, you can call 1800 425 1906 which is a toll-free number that functions 24/7 except for 3 national holidays.

Canara Bank Customer Services

There are plenty of services offered by the bank for the flexibility of the customers and to give them an exposure to the international banking experience. Some of the services offered by the bank are given below.

  • Online Banking - It allows you the whole process of banking in the comfort of your home/workplace via the internet. 

  • Safe Deposit Lockers - It allows you to keep your valuables safely in the selected branches of Canara Bank.

  • Online Trading - You can invest in the share market with the help of the bank to secure your future.

  • Canara Rewards - It is a debit and credit card loyalty program initiated for all the valuable customers which give the opportunity to earn rewards/ bonus point every time you make a transaction with the Canara debit/ credit card with the selected outlet.

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Displaying 4 Comments

Harshith Kulal
Thanks for clearing my doubts regarding Canara bank education loan
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Admin
Thanks for your feedback

Megha

I Need a Education loan

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Rajesh Damor

I want loan for education

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Mrs Meenakshi Sundaram

There is no maximum limit for Education loan,However, education loan up to Rs.10 lakhs is classified under Priority sector advances (RBI guidelines).

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