2018 served as a crucial year for the banking sector in India. State Bank of India (SBI) made a lot of changes in its rules and policies and that is likely to impact other banks too. SBI holds one-fourth share of the total loan and deposits market in India. From reducing the monthly average balance (MAB) for its savings accounts to updating the ATM withdrawal limits, SBI has made a lot of changes.
SBI Education Loan policies have almost remolded. The bank has added numerous reasons for the already existing ones to attract customers. From increasing the maximum loan limit to decreasing the interest rates substantially, SBI has introduced a lot of changes in almost all of its education loan policies. So what exactly are these changes? Let’s see.
The biggest change has been in the rate of interests offered by the bank. As per the RBI’s directive, SBI had already adopted the MCLR structure setting aside the Base Rate system. SBI’s current 1-year MCLR is 8.55%. With the new changes, SBI Education Loan Interest Rates have been reduced to a large extent.
While earlier the rate of interest varied from 11.60%-13.60%, now the maximum RoI under the student loan scheme is 10.80%.
Those who take a loan up to INR 7.5 Lakhs have to pay interest at the rate of 10.55% while for an amount above that, the RoI is 10.80%.
SBI has classified different premier colleges into lists and the ROIs vary accordingly.
List AA- 8.75%
List A- IITs and IIMs: 8.90%
List B- NITs: 9.05%
List C- NITs: 9.05%
For vocational courses also, the RoI has been reduced from 13.35% to 10.05%.
For studies abroad, the interest rate has been decreased from 10.85% to 10.80%.
In order that no student misses admission to a premier college due to fees constraints, SBI Education Loan limits have been extended.
The bank now offers a maximum loan of INR 40 lakhs under its Scholar Loan Scheme.
For vocational education too, the limit has been increased from INR 1 Lakh to 1.5 Lakhs.
Applicants can now also get an extended amount of loan provided they submit tangible collateral.
Doing away with the complex repayment periods, SBI has introduced a universal repayment period of 15 years for all its schemes.
Note: Vocational courses are an exception to this. SBI Education Loan repayment for the vocational courses is only 7 years.
SBI Education Loan Security demands have been eased a lot by the bank. For the Student Loan Scheme, SBI will only ask for the parents/guardians to be the co-borrowers when availing a loan up to INR 7.5 Lakhs. Earlier the bank used to ask for a third party guarantee for a loan in the range of INR 4-7.5 Lakhs. Now, the bank asks for tangible collateral security only when the loan amount is above INR 7.5 Lakhs.
Note: SBI Education Loan earlier had a provision of 0.25% concession for the students with work experience. This provision has been dropped now.