[Please feel free to skip the first 3 paragraphs - I chose to use this space to express my emotions; But the essay after the first 3 paragraphs may prove to be informative for you]
I hate to say this myself. I am a firm believer that there is no point in complaining about a system in place - I believe that if there is anything wrong with a system, one should offer some constructive suggestion to improve the system rather than complaining about it.
But this loan application process totally befuddled me. It's not the statutory underpinnings of an educational loan - I am fine with it - since I got a chance to know about some of the laws, rules, regulations as per the Indian Penal Code; It's the lethargy with which the government organizations (Bank staff, Registrar office Staff, Tamil Nadu Housing Board Staff) are run that is disappointing.
I have seen the attitude of the government employees portrayed in movies and even heard about the same from my parents and friends; but to see and experience it for myself is a different thing. What hurts me the most is the situation has remained the same all these 10-15 years. I have always felt that majority in India believe that working for a government organization is primarily to have a carefree workplace environment and a guaranteed job apart from the numerous benefits that any government employee is entitled to. I don't know how the situation is in government organizations in other countries. There is something that we need to correct in the way we are being introduced to a government job and a government run organization.
Whining for another day. Let me get to the steps involved :
Startling Fact : I got to know that of all the loans, interest rate is the highest for availing educational loans, in India. However, the thing I liked about this is the fact that in State Bank of India and Central Bank of India, a student is exempted from paying any interest on the loan amount up to 6 months after the stipulated course is completed. Typically a student availing loan for a MS program in the US of A, can take 2 years and 6 months before initiating the re-payment process. I don't know if this is the reasoning behind the highest interest rates on educational loans. I am no finance expert - I shall leave it to the experts to comment on that.
1. For availing loan up to 4 Lakh INR, it is enough if we have a guarantor for our loan application. If we are applying for an amount greater than 4 Lakh INR, we need to submit a property as a collateral. What I was told is the fact that the banks are readily accepting only a land with a construction in place as a collateral. The evaluator from the bank will evaluate the worth of the property and will give a report. I was told that the collateral property must be worth at least 150% of the total loan amount sought.
2. Central Bank of India offers loan up to 20 Lakhs. State Bank of India offers loan up to 30 Lakhs.
3. Regarding the House Property as a Collateral : [This list is specific to Central Bank of India - and may not be exhaustive]
- Encumbrance Certificate (E.C) - Original copy for the last 30 years. If we apply for E.C, the registrar office will take at least 3 working days to provide you with one.
- Property tax receipts, Water consumption bill receipts, Electricity bill receipts [better to have these receipts for 3 months (water and electricity receipts, I mean) ]
- Original/Certified Copy of the sale/transfer deed by which your guarantor/co-applicant got rights to the property that you are submitting as collateral for the loan.
- Photo copies of the historical documents ( From the Mother document of the property to the document mentioned in the above listed point ) - This can be a big list of documents in itself.
Once we have the following documents, we can get the documents scrutinized by a member of the panel of advocates associated with a bank to provide a legal opinion. Only upon getting an affirmative response from one of the panel advocates could the property be accepted as a collateral.
4. It is mandatory to have I20 when we apply for the loan (That is what I am told by the Bank Managers). [What I do not understand is how will people manage to get I20 from the University. AFAIK, the students are using the loan sanction letter only during the Visa interview. Initially upon receiving the admission from the University, the university asks for financial proof documents - they do a initial screening and then only courier the I20 document to the students - This means that the Loan cannot be given as a financial proof to the University while requesting for the I20 document]
I hope you guys get the flavor of the procedures involved in availing an educational loan. This is NOT exhaustive compendium. This is just a post to share my experiences which I believe will aid the souls looking for information. Talking to advocates, Bank officers (who were very helpful in clarifying about the processes involved) will help you cross the bridge. Be warned that the loan application process may take a month's time at least. So PLAN ahead.
Good Luck!
