Education and Career Forum

Hello Sir,
I want to apply for an Education Loan from Bank to do MS in Abroad. I have heard that RBI sets risk weightage of Education Loan. Can you please provide me the details of this risk weightage set by RBI?

What is RBI risk weightage?
RBI risk weightage is a measure of the riskiness of a loan. The higher the risk weightage, the more likely the loan is to default. The RBI sets risk weightages for different types of loans, including education loans.
How is RBI risk weightage for education loans calculated?
The RBI risk weightage for education loans is calculated based on the following factors:

• The borrower's credit score: The higher the borrower's credit score, the lower the risk weightage.
• The purpose of the loan: The purpose of the loan is also a factor in calculating the risk weightage. Education loans are typically considered to be lower-risk than other types of loans, such as personal loans.
• The collateral: The presence of collateral also lowers the risk weightage.

What are the benefits of a lower risk weightage?
There are a few benefits to having a lower risk weightage on an education loan:

• The bank will charge a lower interest rate on the loan.
• The bank may be more willing to approve the loan.
• The borrower may be able to get a larger loan amount.

What are the drawbacks of a higher risk weightage?
The main drawback of a higher risk weightage is that the borrower will have to pay a higher interest rate on the loan. This can make the loan more expensive to repay.
How do I find out the RBI risk weightage for an education loan?
You can find out the RBI risk weightage for an education loan by contacting the bank that you are applying for the loan with. The bank will be able to provide you with the specific risk weightage for your loan.