The largest lender, State Bank of India (SBI) is expected to bring down the interest rates on education loan so as to give a relief to the students aspiring to pursue higher studies with the support of education loan.
SBI is going to declare an increase in the education loan rates by 25 basis points during this week. The rate cut would benefit the students who take the loan between May 1st and September 30th.
An SBI official said, "The idea is to help students aspiring for higher studies with adequate financial support. Interest rates on all category of education loans are likely to come down by 0.25%. The scheme will be applicable for all education loans approved during May-September, 2009."
Presently the bank offers education loans at rates hovering between 11.75% and 13.25%. Further the female students are given a 50 basis points concession over the card rates across all the categories of education loan.
SBI extends the loan for tenure of five to seven years.
The bank does not demand any security in case of education loans up to Rs 4 lakh and loans between Rs 4 lakh and Rs 7.5 lakh, security in the form of third party guarantee needs to be provided by the applicant.
In additional loans above Rs 7.5 lakh and upto Rs 20 lakh, the borrower need to submit collateral in the form of some tangible properties like house or land.