How The Girl Child Benefits From Lower Education Loan Interest Rates In India?

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By Sunil Fernandes

Updated: Saturday, March 14, 2015, 9:50 [IST]

Encouraging education for the girl child has always been a priority for many in the private sector in India. The girl child benefits from education loans from banks. Most of the banks in India offer lower interest rates, to the extent of 0.50 per cent for the education of the girl child.

In some cases the norms are slightly relaxed, while in some cases, there are several beneficial schemes that are launched for availing education loan. Take a look at the schemes of the banks and their interest rates, which in most cases is 0.50 per cent lower on education loans for the girl, as compared to education loans for boys.

Interest and Benefits on Education Loan Up to Rs 4 Lakhs For Girl Child

Name of Bank	Interest Rate	Benefit For Girl Child
Axis Bank	Base Rate + 6.50%	0.50% lower
IOB Loans Vidya Jyoti	12.25%	0.50% lower
PNB Saraswati	12.75%	0.50% lower
SBI Education	13.00%	0.50% lower
Syndicate Bank	1.75% above base rate	0.50% lower
Oriental Bank of Commerce	12.25%	0.50% lower
Bank of India	12.70%	0.50% lower
Andhra Bank	Base rate +2.25%	0.50% lower
Punjab and Sind Bank	12.25%	0.50% lower
State Bank of Mysore	12.75%	0.50% lower

As can be seen from the table most of the banks in India offer a concessional loan rate of 0.50 per cent for the girl child. Other banks may also be offering lower interest rates, but the above are definitely offering and one can approach them for details.

Here are some other details for education loans in India

Generally, there is no guarantor required if the loan is below Rs 4 lakhs. However, there is a requirement for a guarantor if it exceeds this amount. A third party guarantee would most certainly be required with most banks.

Above an education loan of Rs 7.5 lakhs most banks seek a collateral in the form of an NSC certificate, Unit Trust of India Certificate etc.

Insurance policy on the life of the student

To protect the bank from a bad debt in case of death of the student, there is a life insurance policy that needs to be taken on the life of the student. The bank will pay the insurance amount by building it into the loan. This means that the applicant ends-up paying for the premium on the insurance.

Repayment terms

The repayment terms generally tend to differ from banks to banks. In most cases it is one year after getting a job.

Conclusion

It's better for parents and students to opt for an education loan when it comes to loan for a girl student. Most other forms of loans like personal and gold loans to meet the education of a girl child is not the right approach as the interest rates in most cases is far higher than that of an education loan.

In cases it is for studies abroad one may need to raise additional resources in terms of collateral. But, as mentioned earlier this is a much better proposition then going for other forms of loans, whose interest rates are far higher.

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