Education and Career Forum

Dear Sir/Mam,

I am Manish Mehta and I am going to get admission in a B.Tech college. I am also going to apply for a Bank Education Loan. Can you tell me that the rate of interest which Banks takes against Education Loan is set by RBI? If not who does it?

Can someone please give me the information soon?

Yes, the rate of interest is fixed by Reserve Bank of India. It is the nominal rate of interest which is fixed by Reserve Bank of India and most of the banks offer that rate of interest only. However, banks have the privilege of certain flexibility in the rate of interest as they can increase upto a certain limit but usually banks go with the minimum rate which is sustaining in the market to live upto the competition with the other banks. However, State Bank of India charges one percent lower interest than other banks. The usual range of interest rate is 13-14.5 percent.

The rate of interest taken against Education loan from students is set by concerned banks but it indirectly depends and is under control of Reserve Bank of India. For example, if repo rate is high, banks will increase its rate of interest on Education loan.

Repo rate is rate of interest at which RBI sanctions loans to different public and private sector banks. So, indirectly repo rate which is set by RBI affects personal and corporate loan. Education loan comes under personal loan.

However, you will not have to pay interest on education loan while pursuing course and one year more after completion of course as central government gives interest subsidy to banks for duration in which student pursue their course.