Sharma has been living in Dubai for several years. His daughter, Neetu, has finished the Indian equivalent of the 12th standard there. It’s Mr Sharma’s wish that his daughter should pursue her higher education in India.

Neetu welcomed his decision as the credibility of the Indian education system was sound.

Educational institutions in India have a quota system for NRIs. But the catch is that the fees are higher than that charged to resident students. If that should be an area for concern then it can be taken care of with an educational loan for NRIs.

What is an NRI education loan?
NRI education loan allows the NRI to educate his child in India in recognised schools and colleges by taking a loan. The objective is to meet tuition, admission, cost of books, equipment and other maintenance costs. Deposits can also be financed under the scheme.

Features
For studies in India, an amount of around Rs 4 lakh to 20 lakh will be available.
Indian nationals and students, who have passed the entrance test or secured admission for the course, will be eligible for availing such loans.

Eligible courses include computer courses conducted by institutes, which have been given due accreditation by the department of electronics, all technical and professional courses, graduate, post-graduate and or doctorate degree studies in recognised schools, colleges and institutions.
For example, a course in medicine, agri sciences, veterinary science, dental science, architecture, computer science, industrial management, business administration among others.

Costs covered under the loan would include fees payable, examination fees, library fees, cost of books, equipments, instruments and uniforms, refundable deposit to the building fund, purchase of computer essential for the course, and other expense related to the course such as project work, thesis, and tours among other things.

Repayment
Holiday or moratorium period (course period plus six months after the completion of the course). If the student gets employed within six months after completion of the course, the repayment should start immediately after the expiry of one month from the date of employment.

Maximum repayment period
The loan is to be repaid in five or seven years after the commencement of repayment. If the student is not able to complete the course within the scheduled time, the extension of time for the completion of course may be permitted for a maximum period of two years.

Margin up to Rs 4 lakh in most cases is nil and above Rs 4 lakh is 5 per cent.

Collateral security

* No security is required up to Rs 4 lakh.
* A third party guarantee is required for a loan above Rs 4 lakh and up to Rs 7.5 lakh.
* If the loan is above Rs 7.5 lakh and up to Rs 20 lakh, then you need to submit a 100 per cent collateral in any of the form of immovable property or NSC, units of the Unit Trust of India, a life insurance policy of Life Insurance Corporation of India, RBI bonds or any transferable government securities.
* Any irregularity or default in repayment will attract penal interest which can be in the range of one per cent. and two per cent per annum over and above the above rate of interest charged on the loan. The loan will be disbursed in stages as per the requirement.
Documents required

w Application (student and parent or guardian jointly)
w Two copies of passport size photos
w Proof of admission to course
w Schedule of expenses for the course.
w A copy of salary certificate or statement (other proof) of income of parent or guardian.
w A copy of passport of parent or guardian and student.

(The writer is CEO of bankbazaar.com.)