The Punjab National Bank (PNB) reduces the interest rate on education loans under the Vidyalaxmi scheme by 20 basis points (bps). Now, the rates on these loans start at 7.5 per cent. The PM-Vidyalaxmi scheme was launched last year on November 6, 2024, in consonance with the National Education Policy 2020. It is an education loan scheme that offers collateral-free, guarantor-free loans and interest subvention. This is unlike traditional education loans where banks require both collateral and a guarantor.
The scheme is to encourage meritorious students for higher studies and support them through easy loans with minimum formalities and other requirements.
Under this scheme, banks provide loans to those students who secure admission to a higher education institution (HEI). There are 860 quality HEIs (QHEIs) in India, which are identified in the National Institutional Ranking Framework (NIRF).
PNB categorises these institutions into three groups:
• AAA group has 85 institutions
• AA has 152 institutions
• A has 623 institutions
Key Features
• This loan is available to any Indian nationals who have secured admission to the QHEIs for a diploma or degree (graduation or post-graduation).
• Non-resident Indians (NRIs), and Overseas Citizens of India (OCIs) are also eligible to take a Vidyalaxmi loan.
• According to the PNB’s press release, the loan is financed based on the applicant’s financial need.
• The loan does not require any collateral, but parents or guardians are required to be joint borrowers
• For AAA and AA-rated educational institutions, the bank stipulates no margin
• In the case of other institutions, the margin is NIL for loans up to Rs 4 lakh
• The margin is 4 per cent (for other institutions) if the loan amount is more than Rs 4 lakh
• The interest rates start from 7.50 per cent after the revision and it is institute-specific
PNB offers interest subvention based on income group and the courses. Here, interest subvention is a subsidy where the government provides financial support to banks, which in turn reduces the interest rate on loans for the borrower.
Income Group – Less Than Rs 4.5 Lakh Annual Income
• For those who secure admission in a technical or professional course under the ‘Pradhan Mantri Uchchatar Shiksha Protsahan Yojana: Central Sector Interest Subsidy Scheme (PM-USP CSIS), the bank offers 100 per cent interest subvention on loan
• For those who secure admission to other courses in institutes covered under the Vidyalaxmi scheme, the interest subvention is 3 per cent.
Income Group – Above Rs 4.5 Lakh To Rs 8.00 Lakh
• For this income group, interest subvention is 3 per cent for all students whether they get admission in a technical or other course in an institute covered under the Vidyalaxmi scheme.
Documentation Required
The required documents include the KYC of student, passport-size photograph, self-attested copy of mark sheets, exam results and offer letter from the institution, proof of family’s annual income, and details of any existing loan.
