Central Sector Interest Subsidy (CSIS) Scheme Explained

Updated on: 16 Jan 2023

Education is the building block of any nation, and the only way to impart education to the masses is to reduce its overall cost. There are several schemes through which the government aims to subsidize the cost of education so that students from financially weak families can get quality education. The Central Sector Interest Subsidy Scheme (CSIS) was conceptualized by the Ministry of Human Resource Development (MHRD) to bridge the gap between the haves and have nots to get quality education at reduced costs. 

The CSIS scheme was launched in 2009, and it aims to provide full interest subsidies during the moratorium period on education loan. In this scheme, one doesn’t have to pledge collateral or have a third-party guarantor to back their loan. You can avail the scheme if you are planning to take admission in a technical or professional course in India. The scheme is not applicable for abroad education loan. The scheme is for students from financially weak families with a gross family income below INR 4.5 lakh per annum. 

Brief Overview of the Central Sector Interest Subsidy (CSIS) Scheme 

The CSIS is available for students who secure admission to a recognized technical university in India or in a professional course. The university or the institution must be in India. The provision of subsidy on interest rate is for a period of 12 months post completion of the course or six months after getting the job whichever is early, and it is essentially the moratorium period for which you will be getting the interest subsidy. Once the moratorium period is over, the student has to start repaying the loan as per the conditions of the loan scheme. 

The scheme will be implemented through all the Scheduled Commercial Banks, and to make it accessible to a larger section of the society. The scheme will work with the Model Educational Loan Scheme of the Indian Banks' Association. The scheme will only focus on professional and technical courses accredited by the NBA or Institutions of National Importance or Central Funded Technical Institutions (CFTIs). Other professional courses that don’t come under the ambit of technical courses will have to get approval from their respective regulatory bodies. For instance, students pursuing law will have to get approval from the Bar Council of India, students in medical colleges will have to take permission from the Medical Council of India, and likewise for other professional courses. 

The scheme can be availed only once per student, and you have to choose whether to avail of the scheme in undergraduate or postgraduate courses. The maximum loan amount under this scheme is INR 7.5 Lakhs. There is no need for collateral, and banks give unsecured loans to students from financially weaker backgrounds. 

Eligibility for Central Sector Interest Subsidy (CSIS) Scheme 

Students must check the eligibility criteria for availing of the CSIS scheme as the scheme can only be availed on financial criteria and nothing else. You must check the following eligibility criteria to avail of the CSIS scheme:

• Your family income must be less than INR 4.5 Lakhs per annum. 
• You can avail this scheme for only those loans that come under the IBA Model Education Loan Scheme.
• The beneficiary of this scheme has to ensure that they haven’t availed the CSIS before as the scheme can be availed only once. Students can benefit from this scheme in their undergraduate courses, post-graduate courses, or integrated bachelor’s and master’s programs. 
• The scheme will only include students pursuing professional and technical courses accredited by the NBA or Institutions of National Importance or Central Funded Technical Institutions (CFTIs). Other professional courses that don’t come under the ambit of technical courses will have to get approval from their respective regulatory bodies like the Bar Council of India for law, and Medical Council of India for medical degrees. 
• The scheme will cease to benefit the loan application if they are expelled from the educational institution. The only exception is the medical ground wherein a student has to discontinue the studies on an ailing health condition. 

Rate of Interest in the Central Sector Interest Subsidy Scheme 

The rate of interest will be decided on the basis of the base rate of the individual banks which varies from one bank to another. The rate of interest will also depend on the interest rates under the IBA Model Educational Loan Scheme. However, one can be assured that they will be getting the least possible interest rate on the education loan as the sole purpose of this scheme is to reduce the cost of technical and professional education for those who don’t have the financial means to continue their studies. 

Read Also,

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• Education Loan for Girl Students in India
• SBI Global Ed-vantage Scheme
• Which is the Cheapest Education Loan in India?
• Education Loan for Working Professionals in India

Income Limit and the Income Certificate 

The income limit is very important as the guidelines of the scheme clearly states that the gross family income of the loan applicants shouldn’t exceed INR 4.5 Lakh from all the sources. The income certificate will be issued by the competent authority designated by the respective state governments. The income certificate must be obtained on the ground of financial condition, and there is no role of social background or for that matter any other criteria to avail the scheme. 

Moratorium Period for Central Sector Interest Subsidy (CSIS) Scheme 

The moratorium period for most education loan by Scheduled Commercial Banks is 12 months post-completion of the studies or 6 months after getting the job. The interest rate during the moratorium period will be paid by the Government of India under the CSIS  wherein the loan applicants will be exempted from any interest payment during the moratorium period. Once the moratorium period is over the student has to pay the interest on the outstanding loan amount as per the terms and conditions of the loan.

Nodal Bank for the Central Sector Interest Subsidy Scheme 

The Government of India has decided to make Canara Bank the nodal agency for the CSIS scheme. It will be the nodal bank for MHRD through which the government will regulate the entire scheme. The implementation and other formalities with respect to loans will be regulated by the government of India through Canara Bank. 

List of Designated Officials to get the Income Certificate for Central Sector Interest Subsidy Scheme 

Interest Concession in the Central Sector Interest Subsidy Scheme 

The IBA scheme offers a concession of 1% on the interest rate if it is paid regularly during the moratorium period or the repayment holiday. The 1% interest concession will be offered to the borrowers even in the CSIS scheme wherein the government of India takes care of the interest payment during the moratorium period. However, it is subject to the interest payment by the government on a half-yearly or annual basis. It helps students in getting a concession on the interest payment plus no payment of interest during the moratorium period. 

The scheme is implemented strictly on the basis of income, and no other criteria like social background can come into the picture for the purpose of this scheme. The beneficiary has to produce an income certificate clearly stating that the loan applicant’s gross family income is less than INR 4.5 lakh per month. The certificate has to be issued by the competent authority designated by the respective state governments. MHRD has issued a broad set of guidelines to state governments to designate authorities for the issuance of income certificates. You can contact the authority and get the certificate to apply for this scheme. The move is expected to make a considerable difference in terms of the representation of students from financially weak families. 

• Scholarships 

First published date: 25 Feb 2022