SBI vs BOB: Which is Better for Education Loans?

    Updated on: 11 Sep 2023

    sbi vs bob

    Both these banks do not charge any prepayment penalties if you decided to foreclose your loaIn 2022, the number of Indian students pursuing education abroad reached a six-year peak, with over 770,000 students venturing overseas. This trend led to a 68% increase in the loans disbursed by public sector banks for the same year, resulting in approximately 7,500 crore INR being disbursed.

    This makes it evident that public sector banks are the preferred choice when it comes to abroad education loans. If you're also planning to fulfill your dream of studying abroad soon, you may also be exploring education loan options in public sector banks as well. In this blog, we are going to compare two prominent public sector banks that is SBI and BOB so that you can make an informed decision. 

    Comparative overview of SBI vs BOB abroad education loan

    State Bank of India (SBI) and Bank of Baroda (BOB) are 2 of the top three public sector banks in the study abroad domain for the financial year 2021-22. Although both banks offer similar features, it is important to consider certain distinct factors when choosing between them. The table below provides an overview of the differences between BOB and SBI.

    Basis of difference



    Rate of interest

    Starts at 10.15% (girls) and 10.65 (boys)*

    Starts at 9.90% (girls) and 10.40% (boys)*


    Optional** (Rinn Raksha)

    Mandatory (Group credit Life Insurance)

    Moratorium period

    Course + 6 months

    Course + 12 months

    Processing fees

    10,000 INR (non-refundable)

    10,000 INR (refundable in case of premiere institute)

    Margin Money

    10% in every case

    Nil (Premier institute) 10% - 15% (non-premiere institute)

    Loan Approval Basis GRE / GMAT? 




    *Interest rate as on July 2023

    **Students who opt for Rinn Raksha insurance are eligible for an additional 0.5% concession on the overall interest rate of their education loan

    SBI vs BOB: Rate of interest and insurance

    The interest rate is the percentage imposed by a lender on the borrowed sum, reflecting the expense of borrowing. It plays a crucial role in choosing a bank for an education loan since even slight fluctuations in the interest rate can significantly affect borrowing expenses. Although the State Bank of India (SBI) and Bank of Baroda (BOB) both provide floating interest rates based on the EBLR established by the RBI, it's worth noting that they begin at different initial interest rates.

    • SBI interest rate for abroad studies that starts at 10.15% for female applicants and 10.65% for male applicants. Similarly, BOB also provides an attractive interest rate which starts from 9.90% for females and 10.40% for male applicants. Both these banks are providing a 0.50% concession or interest incentive if you are a female applicant.
    • In the case of SBI, you can get an additional interest rate discount if you enroll yourself for Rinn Raksha insurance. The maximum discount that you get from SBI is 1%. This Rinn Raksha insurance is optional while in the case of BOB, the insurance is mandatory to take for which the premium can be adjusted in the loan amount. 

    Therefore If you are a female applicant with a strong academic record and an interest in purchasing insurance, SBI could be a preferred alternative. However, for male applicants, BOB may also be a wise choice.

    SBI vs BOB: Moratorium period 

    The moratorium period is a designated duration in which borrowers are exempted from making principal or interest payments. It offers students financial flexibility, enabling them to concentrate on their studies without immediate repayment obligations. Various banks may offer different lengths of moratorium periods, and opting for a bank with a more extended moratorium period can grant students more time and financial relief. By carefully evaluating the moratorium periods provided by different banks, students can select a loan provider that suits their financial requirements and offers essential support throughout their academic pursuits.

    • SBI provides a moratorium period that lasts until the completion of the course, with an additional 6 months grace period, during which you may have the opportunity to defer payments without any obligation. This is known as a payment-free moratorium period.
    • On the other hand, BOB offers a moratorium period that extends up to the course duration, plus an additional 12 months, but during this period, you will be required to pay simple interest.


    Get the Funds you need to Study Abroad Check Your Loan Eligibility Now!

    SBI vs BOB: Processing fees and margin money

    When deciding between banks for an education loan, it is important to consider the processing fees and margin money as key factors. Processing fees refer to the charges levied by the bank for handling the loan application. Margin money is the portion of the loan amount that you would need to arrange yourself. 

    • The processing fee charged by SBI is 10,000 INR plus GST and this processing fee is not refundable. On the contrary, the processing fee charged by BOB is similar to SBI which is 10,000 INR plus GST. Still, the benefit is that in case your university is listed in the premier university list then the processing fee becomes refundable and this can be in the majority of the cases as BOB have approx 400 universities listed in the same.
    • When considering margin money, BOB does not charge any margin money if your university/college is listed in its premier list. However, if it is not listed, then you would have to arrange 10% - 15% of the amount as a margin. On the other hand, with SBI, you would have to pay 10% as a margin in every case.


    So considering a situation in which you need an abroad education loan and your university is on the premiere list of BOB then you can go for a secured education loan with BOB but in case you have plans to be enrolled in a university that is not on the list of premier institutions of BOB then going for SBI would be a wise choice because in here you would only have to arrange 10% as margin whereas it can go up to 15% for BOB. 

    Both these public sector banks are quite similar in terms of their abroad education loan offerings. But the overall choice between them depends on your requirements as a user. In case you want a secured loan as a male applicant and you do not have any problem in arranging margin money then you can go for an SBI education loan. While in case you are a female applicant that wants to save additional costs and has a university listed in BOB’'s premier institute list then of course BOB would be the best choice for you.

    Now that you know several differences between BOB and SBI, you can confidently start your abroad education journey by comparing them on different aspects and analyzing which one aligns more with your requirements. If you still can’t decide which is better for you and feel like this is a lot of work for you, then don’t worry, let GyanDhan help you. All you have to do is   with us.

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    Frequently asked questions

    Which bank has a better interest rate - SBI or BOB?

    Although both banks have various interest rate incentives but considering a non-incentive interest rate BOB has more reasonable interest rates starting at 9.90% and 10.40% for female and male applicants respectively. 

    Does SBI or BOB provide unsecured education loans?

    Yes, both of them can provide you with unsecured education loans if your amount is up to 7.5 Lakhs INR. In case your loan amount is more than that then you would have to pledge collateral. 

    Are there any special benefits or discounts for female applicants with either bank?

    Yes, both these banks provide a concession in interest rate by 0.50% if you are a female applicant. Apart from it, there are a few more interest rate incentives that you can get with SBI but not with BOB like when you opt for Rinn Raksha insurance then you can get a 0.50% discount no matter your gender. The only condition for SBI abroad education loan is that the maximum discount that you can get cumulatively could not be greater than 1%.

    Do I need to pay a pre-payment penalty for either SBI or BOB?


    First published date: 28 Jul 2023

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Sahil Sahil khan

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GyanDhan is India's first education financing marketplace.

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