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Education Loan in Mumbai

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Brinda Khurana
Brinda Khurana
Updated on:  14 Jun 2024  | Reviewed By: 
Aman 
| 213 | 10  min read

Almost all of Mumbai's major banks and non-bank financial institutions offer education loans. There are numerous reasons why you should consider getting an education loan. An education loan can help you enroll in a reputable institution or university or pursue your study abroad. 

The loan amount is normally determined by the courses taken by the student or the educational institution where you have acquired admission. The loan amount might be up to 10 lakhs for studies in India and 25 lakhs or more for education overseas.

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Leading Banks for Education Loan in Mumbai For Studies in India 

Bank Name  Loan Amount Processing Fee

State Bank of India 

Up to INR 50 lakh

Nil - INR 10,000+Tax 

Axis Bank 

Up to INR 75 lakh (unsecured) 

Up to 2% of the amount+GST 

ICICI Bank 

Up to INR 1 crore 

Up to 2% of the amount +GST

IDFC First 

Up to INR 30 lakh (unsecured) 

Up to 1.5% of the amount 

UBI 

Up to INR 1.5 cr (secured) 

Up to INR 40 lakh (unsecured)

INR 5000 (refundable) 

HDFC Credila 

Up to INR 20 lakh 

1% + GST 

Auxilo 

Up to INR 65 lakh 

Up to 2% of the sanctioned loan amount 

Avanse

Up to INR 75 lakh

0.5% - 1.5% 

InCred 

Up to INR 60 lakh

0.75% - 1% of the sanctioned loan amount

BOB 

INR 7.5 lakh - INR 1.5 cr 

1% (max. INR 10,000) 

Check Your Education Loan Eligibility

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Best Banks for Education Loan in Mumbai for Abroad Studies

Bank Name  Loan Amount  Processing Fee

State Bank of India 

Up to INR 1.5 cr with collateral 

INR 10,000

Axis Bank

Prime A - INR 50 lakh 

Prime B - INR 40 lakh 

0.75% on the sanctioned loan amount 

ICICI Bank 

Up to INR 2 cr (secured) 

Up to INR 1 cr (unsecured) 

Up to 2% + GST 

IDFC First Bank

Up to INR 50 lakh without collateral 

Up to 1.5% of the sanctioned loan amount 

Union Bank of India 

Up to INR 1.5 cr (secured) 

Up to INR 40 lakh (unsecured) 

INR 5000

HDFC Credila 

Up to INR 65 lakh 

0.5% - 1% 

Avanse 

Up to INR 75 lakh 

1% - 1.5% 

Auxilo 

Up to INR 65 lakh 

0.5% - 1.5% 

InCred 

Up to INR 60 lakh 

1% - 2% 

MPower Financing

Up to 100,000 USD 

5% (adjusted in the loan amount) 

Prodigy Finance 

Up to 100% cost to study 

Up to 5%, added to loan amount 

Bank of Baroda 

Up to 1.5 cr with collateral 

INR 10,000 + GST 

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Documents Required for availing an education loan in Mumbai 

To apply for a student education loan in Mumbai, you'll need to compile a comprehensive set of documents categorized into several sections as outlined below:

Section 1: Application and Identification

  • list items Complete and submit the education loan application form, which can be filled out online via the WeMakeScholars website. Additionally, include two recent passport-size photos of the applicant.

Section 2: Proof of Identity and Residence for Applicant, Co-applicant/Guarantor

  • list items Identification proof can include the Aadhar card, PAN Card, or Passport (for studies abroad).
  • list items Residence proof requires two distinct documents if the permanent and current addresses are the same, such as an Electricity Bill, Aadhaar card, Telephone Bill, Bank statement, Voter ID Card, or Ration card.
  • list items For co-applicants: Bank statements (last 6 months for salaried; business transactions for the last year if self-employed) and an official statement of assets and liabilities.

Section 3: Academic Credentials

  • list items Include the admission letter from the educational institution, detailed fee structure, GMAT/IELTS/GRE scores, and academic records from 10th grade onwards, including certificates.

Section 4: Financial Documents for co-applicant's

  • list items For salaried individuals: Recent Form 16s, salary slips, an office ID card, and ITRs for the last two years.
  • list items For self-employed individuals: Profit and loss statements, balance sheets for the last three years, business address proof, and ITRs for the last three years.

Section 5: Additional Affidavits and Declarations

  • list items A declaration by the co-applicant regarding covering other expenses and a joint affidavit in the bank’s format.

Section 6: If Applicable

  • list items Include receipts of payments made to the university, statements of any loans taken in the last year, and a gap certificate explaining any breaks in academic history on a Rs 100 stamp paper.

This structured approach ensures that both the applicant and the financial institution have a clear understanding of the financial and academic readiness for the proposed study plan.

 

Check Your Education Loan Eligibility

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Acceptable Collaterals in Mumbai for Education Loan 

For securing a collateralized education loan in Mumbai, particularly when offering immovable property as security, you'll need to prepare a set of specific documents related to the collateral:

  • list items Obtain a no-objection certificate in the bank’s specified format either from the construction company or the housing society’s administration.
  • list items Compile all the payment receipts made towards the construction firm or the previous property owner.
  • list items If the property being pledged has changed hands before, a share certificate is necessary.
  • list items The property's conveyance deed is a must-have document.
  • list items A confirmation document for any Power of Attorney (POA) issued by the construction firm.
  • list items For properties that are significantly old, banks, especially public ones, may ask for a structural integrity report.
  • list items In cases where the property is newly built, a commencement certificate is required.
  • list items For properties under a builder’s project, you must provide either a board resolution certificate or a POA document from the builder.

These documents are essential for processing a collateralized education loan in Mumbai, and requirements might differ slightly from one state to another. It is advisable to consult with a loan officer to get a comprehensive and precise list of the documentation needed for your specific case.

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Education Loan Interest Rate in Mumbai For Studies in India

Bank Name  Interest Rate  Interest Rate Concession 

State Bank of India 

Starts from 8.30% 

0.60% Business strategy discount 0.50% - for female students 

0.50% - Rinn Raksha 

Axis Bank 

Starts from 11.5% 

0.5% - 2% 

ICICI Bank 

Starts from 10.5% -11% 

0.5% - 2% 

IDFC First 

Starts from 8.5% - 10% 

0.5% - 2% 

UBI 

Starts from 11.15% 

0.5% for female students

1% if the SI is paid in full 

HDFC Credila 

Starts from 10.25% - 12.75% 

Auxilo 

Starts from 11% - 13.5% 

0.5% - 2% 

Avanse

Starts from 11% - 13.5% 

0.5% - 2% 

InCred 

Starts from 11% - 13.5% 

0.5% - 2% 

BOB 

Starts from 8.85% 

0.5% 

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Education Loan Interest Rate in Mumbai For Studies in Abroad 

Bank Name  Interest Rate  Interest Rate Concession 

State Bank of India 

Starts from 10.15% 

0.5% concession in interest for female students 

0.5% - Rinn Raksha 

Axis 

9.99% - 12.5% 

ICICI 

10.95% - 12.5% 

IDFC First 

9.5%-11% (secured) 

10.75%-13% (unsecured) 

UBI 

9.25% - 9.75% 

HDFC Credila 

10.25% - 12.75% 

Avanse 

10.75% - 13% 

Auxilo 

11.5% - 13% 

InCred 

11.85% - 13.25% 

MPower 

12.99% - 15.99% 

-

Prodigy 

11.5% - 13.5% 

-

BOB 

9.7% (fixed) 

0.20% concession in interest for female applicants of non-premier institutes

Calculate your Education Loan EMI

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Other Education Loan Features Offered by Banks or NBFCs in Mumbai 

Expenses Covered 

  • list items Fees payable to college/school/hostel
  • list items Examination/Library/Laboratory fees
  • list items Purchase of Books/Equipment/Instruments/Uniforms, Purchase of computers- essential for completion of the course (maximum 20% of the total tuition fees payable for completion of the course).
  • list items Caution Deposit/Building Fund/Refundable Deposit (maximum 10% of tuition fees for the entire course).
  • list items Travel Expenses/Passage money for studies abroad.
  • list items Any other expenses required to complete the course like study tours, project work etc.
  • list items Insurance premium for the student borrower
  • list items Admission acceptance fee

It is critical to thoroughly examine the loan terms and conditions to determine what expenses are covered in education loan. The lender may have certain rules or limits regarding how the loan might be used.

Moratorium Period 

The moratorium period for an education loan is a set period of time during which the borrower is not obligated to make any loan payments. Most Mumbai-based banks have a moratorium period of course duration plus six months, or one year. The loan repayment conditions during the moratorium period varied between public banks, private banks, and NBFCs. In public banks, simple interest is charged on the loan amount; however, applicants are not required to pay simple interest during the moratorium period. During the moratorium period, commercial banks must pay compound interest. In NBFCs, EMI must be paid during the moratorium period. 

Loan Margin 

The loan margin is a percentage of the total loan amount to be negotiated by the student/applicant. For example, if the loan margin is about 5% and the loan amount is approximately 60 lakhs, the student would need to come up with an additional 3 lakhs to get the loan approved.

In public banks, the loan margin is typically 10% of the total loan amount. In private banks, lending margins range from 5 to 10%.

Collateral Margin 

The collateral margin refers to the part of the loan amount that is secured education loan with collateral. The collateral margin is typically considered in the case of secured loans. If the applicant fails to repay the loan, banks will use the collateral given by the student or applicant to retrieve the outstanding balance. 

Check Your Education Loan Eligibility

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Common Reasons for Education Loan Rejection in Mumbai 

Banks have stringent criteria and document requirements for approving student loans, and any discrepancy can lead to rejection. Here's a summary of common grounds for education loan denial in Mumbai:

  • list items Collateral such as Chawl properties is not eligible for securing an education loan.
  • list items Properties under the pagdi system cannot be used as collateral.
  • list items Government-allocated properties to slum dwellers for rehabilitation purposes are also not viable for loans.
  • list items Properties associated with MAHADA that are less than 10 years old are ineligible.
  • list items In general, flats or houses without an occupancy certificate in Mumbai are not accepted as collateral by public banks, though exceptions might be made with a possession certificate and property tax receipt.
  • list items For CIDCO properties in Navi Mumbai (from Vashi to Panvel), it's essential to have society formation documents; association formation is not recognized. The application should include a bank letter to CIDCO authority, a CIDCO letter, two affidavits, and a letter supporting CIDCO. Absence of a conveyance deed necessitates a Builder NOC; if it is available, a CIDCO NOC is needed.

If your application falls into any of these categories, there's a significant chance it could be turned down.

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Frequently Asked Questions 

Which is the best bank for education loans in Mumbai?

When it comes to obtaining an education loan in Mumbai, public banks are often preferred over private banks and NBFCs due to their lower interest rates and more flexible repayment options.

Do we require collateral to obtain an education loan in Mumbai?

Securing a secured education loan in Mumbai typically requires the submission of collateral. The loan amount is determined based on the collateral's value and the bank's collateral margin.

What is the maximum tenure of an education loan in Mumbai?

Education loans in Mumbai can have a repayment tenure of up to 15 years, excluding the moratorium period, with public banks usually offering longer tenures compared to private banks and NBFCs, which offer 10-12 years.

What collateral can be accepted to obtain an education loan in Mumbai?

Acceptable collaterals for securing an education loan in Mumbai include immovable properties like houses and flats, as well as liquid securities such as LIC policies, fixed deposits, and government bonds.