CCEA Approves Credit Guarantee Fund for Education Loans (CGFEL) & Central Sector Interest Subsidy (CSIS) Scheme

Published Date - 29 March 2018 03:06:19 Updated Date - 15 April 2018 02:30:00

The Cabinet Committee on Economic Affairs (CCEA) has approved continuation of Credit Guarantee Fund for Education Loans Scheme. It also approved continuation and modification of Central Sector Interest Subsidy Scheme for period from 2017 to 20.

This will provide education loans to 10 lakh students during this period, it added. The restructuring of scheme is in accordance with policy of Government to make good quality education affordable to all.

 The Credit Guarantee Fund Scheme for Education Loans provides guarantee for the education loan disbursed by banks without seeking any collateral security and third-party guarantee, for a maximum loan amount of Rs 7.5 lakh per student.

Under this Scheme Interest Subsidy is given during the moratorium period i.e., Course period plus one year on Education Loan taken from the Scheduled Banks under the Model Education Loan Scheme of Indian Banks Association to students belonging to economically weaker sections whose annual parental income is up to Rs. 4.5 Lakh from all sources. The subsidy is allowed for undergoing recognised Professional/ Technical courses in recognised Institutions in India. This subsidy is allowed only once. The Nodal Bank is Canara Bank, Bengaluru.

Central govt. has raised the upper limit for education loans to Rs. 7.5 lakh. This will ensure quality education to the students. Moreover, govt. will open a dedicated portal to easily provide education loans.

CGFEL and CSIS Schemes provide education loans to the students with full interest subsidy and without any third party guarantee.

Modifications in the present proposal:

CCEA approves the following modifications in CGFEL and CSIS Schemes to provide education loans with interest subsidy:-

  • The upper limit of the loan amount is now fixed at Rs. 7.5 lakhs so that more students can take benefits of these schemes. This decision comes after taking into consideration that the average education loan size is Rs. 4 lakh.
  • Moratorium Period (Time period for which candidates are not required to make repayment during loan term) is now course period plus one year.
  • Candidates can now take loans for pursuing professional or technical courses from NAAC / NBA accredited Institutions / National Institutions / Central Funded Technical Institutions (CFTIs). However, this condition is not applicable to the previously taken / current loans.
  • Govt. will set up a dedicated dashboard to properly monitor this scheme.

Coverage – The restructuring of CGFEL and CSIS Schemes will increase the coverage area of loans upto 20%. With these proposed modifications, the number of education loans are expected to rise to 3.3 lakhs which are currently 2.78 lakhs. The primary objective is to make quality education affordable for all through education loan guarantee scheme and education loan interest subsidy scheme..

Central Sector Interest Subsidy (CSIS) Scheme

Education Loan Interest Subsidy Scheme was launched on 1 April 2009. Under this CSIS Scheme, govt. provides full interest subsidy for education loans from Scheduled banks under Model Education Loan Scheme of Indian Banks Association. These loans covers a period of course duration + 1 year.

All the students whose parents annual income from all sources is less than Rs. 4.5 lakh are eligible. In addition to this, these loans covers all the professional / technical courses in India.

Govt. disburses these education loans with interest subsidy without any collateral security and 3rd party guarantee. Till now, govt. has already disbursed Rs. 9,408.52 crore for interest subsidy to benefit around 25.10 lakh students.

Credit Guarantee Fund Fund for Education Loans (CGFEL) Scheme

This education loan guarantee scheme provides guarantee under Model Education Loan Scheme of Indian Banks Association. Now students can avail loans upto Rs. 7.5 lakh without any security and guarantee. Furthermore, govt. must rationalize the scheme to serve more students from economically weaker sections (EWS).                                                                                     

Students with annual gross parental income up to Rs 4.5 lakh are eligible for the scheme and the loans are disbursed without any collateral security and third-party guarantee.

An amount of Rs 9,408.52 crore has been disbursed towards interest subsidy and 25.10 lakh students have benefitted till date.


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