Disbursement Process of Canara Bank Education Loan
Education Loan

Disbursement Process of Canara Bank Education Loan

Disbursement Process of Canara Bank Education Loan

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Read GyanDhan’s guide on Canara Bank education loan disbursement process, documents required for disbursement, and perks of the Canara Bank education loan.

GyanDhan

Anam Shams

Updated on: 26 Dec 2023

Did you know? Students who experienced loan disbursement delays had problems covering their personal expenses, registering for courses, and attending classes. These challenges had a significant impact on the final performance in terms of GPA.

When you get a sanction letter, it means your loan application is approved. But, the actual money transfer, or disbursement, happens after you complete some additional formalities following the approval. Let’s understand every aspect of the Canara Bank education loan disbursement process in detail so that you can do it with ease. 

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Overview of Canara Bank abroad education loan

There are several Canara Bank education loan schemes, but only two are specifically designed to assist students studying abroad. Let's take a glance at these schemes.

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1. Education loan scheme for pursuing MS abroad

The scheme provides financial support for abroad studies from select top-ranking universities. This scheme is limited to STEM master’s courses only. 

Feature  Description

Loan amount

Up to INR 1 Cr

Interest Rate

9.25% - 11.35%

Margin money

10% of the loan amount

Processing fees

Up to INR 20,000

Repayment tenure

15 years

Moratorium period

Course duration + 12 months

Collateral requirement

Residential property such as houses or flats, Non-agricultural land, Fixed Deposits (FDs), Government bonds, and more. 

Accepted co-applicant

Parent or Guardian

2. IBA model education loan scheme

This is the Canara Bank abroad education loan scheme which is almost similar to other public sector banks’ IBA education loan for abroad schemes. An overview of this scheme is shown in the table below. 

Feature Description

Loan amount

Up to 100% cost to study

Interest rate

9.2% - 10.75%

Margin money

15% of the loan amount

Repayment tenure

Up to 15 years

Moratorium period

Course duration + 12 months

Collateral requirement 

Tangible Collateral security to cover at least 100% of the loan amount

Accepted co-applicant

The loan is granted jointly with the parent/Guardians of the student.

 


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Disbursement process of Canara Bank education loan

For all the public sector banks the disbursement process is quite similar. Canara Bank education loan also looks like them as well. The disbursement process of Canara Bank education loan takes place as per these steps - 

  • list items Documentation for disbursement

Before you can receive the disbursement, several documents must be submitted. First, you need to fill out a disbursal form to obtain the disbursement letter from the bank, which will be used later in the process. Additionally, you must submit proof of the required funds. For tuition fees, you may provide documents like the I-20, and similar documents for other expenses. An Income Certificate, covering the annual income of the entire family of the applicant, must be submitted at the time of loan sanction or the disbursement of the first installment. This may be requested every year, depending on the applicant's profile.

  • list items Verification and disbursement letter

A final verification process is conducted for the documents submitted in the previous step. The bank may perform an Original Seen and Verified (OSV) process to ensure everything is in order. Once the bank completes the verification, it issues a study loan disbursement letter, specifying the final loan amount to be paid. The disbursement letter needs to be signed by the student before the disbursal.

  • list items Transfer of funds

In the final stage, Canara Bank disburses the tuition fee directly to the university. Just to be on the safer side it is always recommended that a borrower should submit the tuition fee disbursement schedule to the lender in advance. If you opt for on-campus housing then in this case as well accommodation cost is also sent directly to the student.

For other expenses like off-campus accommodation and other living expenses, the funds are transferred to the student's bank account. Apart from that, the bank also provides a travel card (FOREX Card) that can be topped up with foreign currency for students to spend. This helps them initially when they land abroad and do not have a foreign bank account.

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Challenges during education loan disbursement

Common challenges experienced by borrowers in the disbursement of education loans are - 

  • list items Discrepancies in loan amounts: The ultimate disbursed loan amount may deviate from the initially approved sum, attributed to adjustments by the lender or alterations in the student's eligibility.
  • list items Loan servicing and communication hurdles: Borrowers may encounter difficulties in communicating with the lender or its loan servicing agency regarding inquiries, modifications in repayment terms, or other related concerns.

To prevent or reduce these problems during the disbursement process of Canara Bank education loan, students should stay active, know what is happening, and stay organized while applying for and receiving the loan. But do not worry, because Canara Bank's disbursement process is easy and does not have these issues.

Read also:

After getting the loan, students often forget important steps in the education loan process. Things like repaying the loan, taking advantage of tax benefits, and other crucial factors are often overlooked by lenders. Since education loans are long-term commitments, it's a good idea for students to get advice from experts. Our knowledgeable education loan counselors guide students throughout the process and help them make smart decisions. Considering the already high cost of studying abroad, we do not want students to stress about our fees. That's why all our services at GyanDhan are completely free for students. Start your journey today by checking if you're eligible for a loan.

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Frequently asked questions

What is the IBA model education loan scheme of Canara Bank?

The IBA model education loan scheme provides financial support based on the applicant's needs for both domestic and international education. Students pursuing skill-based courses in India are eligible for this scheme.

What is the validity of the Canara Bank education loan sanction letter?

After the bank provides the disbursement letter, which is valid for six months, the borrower needs to initiate the disbursement process promptly. It's vital not to take a laid-back approach upon receiving the sanction letter to prevent last-minute stress and rushing when paying the tuition fees.

What happens after the Canara Bank education loan sanction letter is received?

Once the education loan has been approved, both the applicant and co-applicant need to visit the bank and sign the approval letter. Afterward, the student can proceed to request disbursements.

What are the expenses that Canada Bank education loans cover?

Canara Bank education loan covers tuition fees, travel, accommodation, and any other study-related expenses.

How Canara Bank's education loan is disbursed?

After the student submits the required documents for disbursement, the bank will provide a disbursement letter and then release the funds. The tuition fees will be directly sent to the university's account, while the remaining amount will be transferred to the borrower's account.