SBI is a household name when it comes to banking, and it has gained its reputation as one of the most trusted lenders in the country. Every year SBI sanctions loans for both abroad and domestic higher studies. SBI has one of the best schemes for abroad education as the loan terms are framed in coherence with the needs and financial capability of the major section of borrowers. Let’s see SBI education loan disbursement.
SBI has one of the most affordable student loans with interest rates less than its competitors, and repayment terms are also feasible. The loans schemes are structured to give the borrower ample space for repayment by allowing prepayment to a standard moratorium or repayment holiday of one year. For better understanding, you can use an online SBI education loan repayment calculator.
This article will focus on one of the most crucial aspects of the lending process: the disbursal of loans. It’s a common misconception among loan applicants that the work is done once the loan is sanctioned. However, if a loan applicant is not active, then the whole process may get delayed.
SBI Education Loans- The reason for choosing the bank
One of the crucial reasons why people prefer SBI over others is the fact that it comes under the category of “too big to fail”, which means that it can’t fail; the government will always save the bank. Also, the bank has been at the forefront of lending with the most affordable interest rates and without any hidden terms and conditions. The reason for choosing SBI for education loan purposes is because of the following reason-
- Low-interest rate than most of the public sector and private banks.
- The term of repayment is framed with the public good in mind rather than solely profit-making.
- Tax benefits and social security schemes are linked with the loans.
- Loan coverage up to INR 1.5Cr with collateral and INR 7.5 lakhs without collateral.
- The repayment period of 15 years is considerably long, giving students the utmost liberty to repay the loans.
- The processing fee is kept at a bare minimum, and in some cases, there is no processing fee at all.
- Provision to get a top-up loan for taking a second degree and thereby adjusting the moratorium period.
Application and Approval of the loan
The process before the disbursement of the loan is the application and approval of the loan. Once an applicant applies for the loan, there is a step by step process, and it is as follows:
- The application has to be filled for the application of the loan on the bank website.
- A list of documents that has to be submitted is sent via email.
- Submission of documents at the bank branch.
- The branch does the verification of documents, so it’s advised to double-check all the documents before submitting them for verification.
- The banks’ valuator will do a thorough valuation of the assets that are pledged as collateral. Valuators do both legal and technical valuation, so the asset mustn’t be under dispute.
- The loan amount is calculated by factoring in all the relevant factors.
After all the assessment is done, the bank will issue a sanction letter, which will be valid for the next six months. And, hence the loan is deemed to be approved. Once the applicant and the co-applicant sign the letter, a loan account is opened in the student’s name. All the original document is submitted, and an equitable mortgage is created. It provides that the borrower deposits the title deed of the property as security in favour of the bank until the loan is fully repaid.
This process requires a lot of formalities that have to be done, and it gives an impression that the loan process is completed. However, there is still a considerable amount of work that has to be done in order to complete the process. The completion is marked only by the disbursal of the loan. Often, applicants tend to get relaxed after the approval of the loan and miss crucial deadlines in case of delays in the disbursement of the loan. So it’s always better to get the loan disbursed as soon as one receives the confirmation from the university or college.
SBIs Education Loan Disbursement
The loan disbursement is a three-step procedure:
- Document Collection: It is a crucial part of the loan disbursement procedure. It starts with the collection of documents related to proof of expense. The loan amount is pivoted around these documents, so any irregularity with the documents will directly impact the disbursal of the loan. So it’s advised to have all the documents in order so that the whole process can be completed smoothly.
Essential documents for the disbursal of loan:
- The letter from the university with all the details regarding the tuition fee and other fees applicable at the time of admission.
- The second most crucial element is the cost of accommodation. Those students opting for in-campus will have to provide the hostel fee structure provided by the university. And those residing outside the campus will have to give the rent agreement.
- The cost of living should also be mentioned in those loans where it covers these expenses. The cost of living is usually capped at a certain percentage of the total loan amount. In the case of SBI, it is capped at 20% of the loan amount in its Global EdVantage scheme.
- Other costs that an applicant may wish to incorporate as part of the loan. The cost of travel, insurance, etc., has to be included at the applicant’s request and doesn’t come as a part of the loan.
2. Disbursement letter from SBI: Once the expenses are evaluated and the bank is satisfied with the expenses put forward by the applicant, the bank issues the disbursement letter. The disbursement letter consists of the final amount that will be paid to the applicant.
3. Disbursement of Loan: After signing the disbursement letter from the bank, the tuition fee is credited into the university’s account. In case a student chooses to live on the campus, the hostel fee is also credited along with the tuition fee. However, if a student decides to live outside the campus, then money for the rent and all other expenses are credited into the student’s savings account. Another option is to get the money loaded into a forex card and then use it for living expenses.
Certain countries put criteria for the issuance of visas wherein the student has to get the loan disbursed. In these cases, SBI disburses the money so that the visa can be issued. Countries like Australia, New Zealand, and Canada put forward these criteria, and thus SBI makes exceptions where the law of a country mandates the pre-disbursement. SBI being a trusted bank provides the best education loans for abroad education. In fact, the upper limit for the loan is INR 1.5Cr.
The loan disbursal process is prompt with SBI, and if an applicant chooses to go through financial services companies working in this space, most of the taxing work is taken care of by their representatives. This not only helps save time and energy but also helps the applicant understand the nuances associated with different loans offered by different banks. If at all some problem arises in the loan disbursal or assessment of collaterals, these companies help root out the issues.