Executive Summary:
This document outlines educational loan schemes available to Scheduled Caste (SC) and Scheduled Tribe (ST) students. It details the Model Education Loan Scheme (MELS) implemented by Scheduled Commercial Banks (SCBs), the PM Vidyalaxmi scheme, and the National Scheduled Castes Finance and Development Corporation (NSFDC) education loan program. The document also provides data on the number of SC/ST students in Telangana who have benefited from these schemes as of March 31, 2025.
Key Points / Main Content:
Model Education Loan Scheme (MELS):
* Implemented by all Scheduled Commercial Banks (SCBs) as per RBI guidelines, last amended on March 21, 2024.
* Available to all sections of society, including SC/ST students.
* Need-based loans with no collateral required for loans up to ₹7.50 lakhs, if eligible for Central Sector Interest Subsidy Scheme (CSIS) and Credit Guarantee Fund Scheme for Education Loan (CGFSEL).
* No margin for loans up to ₹4 lakhs.
* Moratorium period: study period plus one year.
* Repayment period: Up to 15 years after the moratorium.
* Public Sector Banks (PSBs) may provide collateral-free loans beyond ₹7.50 lakhs based on their board-approved policies.
* Banks should not mandatorily obtain collateral for educational loans up to ₹4 lakhs (RBI circular dated April 12, 2010).
PM Vidyalaxmi Scheme:
* Launched on November 6, 2024, to facilitate education loans to meritorious students admitted to top-tier Quality Higher Educational Institutions (QHEIs). Last updated list of 902 QHEIs on 8.8.2025.
* Provides collateral-free and guarantor-free education loans through a simplified application process.
* Available to all sections of society, including SC/ST students.
NSFDC Education Loan Scheme:
* Administered by the National Scheduled Castes Finance and Development Corporation (NSFDC).
* Provides loans at concessional interest rates to SC individuals with family incomes up to ₹3.00 lakhs per annum.
* Disbursed through State Channelizing Agencies (SCAs), Regional Rural Banks (RRBs), and Public Sector Banks (PSBs).
* Loan covers admission fees, tuition fees, books, stationery, and equipment.
* Maximum Loan Limit: Up to ₹40.00 lakh for studies in India and Abroad or 90% of course fee, whichever is less.
* NSFDC charges SCAs 2.5% interest; SCAs charge beneficiaries 6.5% interest.
* Repayment period: Up to 12 years.
Telangana Beneficiary Data (as of March 31, 2025):
* Scheduled Commercial Banks (excluding RRBs) credit outstanding to SC/ST students: ₹247.60 crore (provisional), with 0.04 lakh outstanding accounts.
* NSFDC released ₹7.91 lakhs to 4 students under the educational loan scheme.
Impact Analysis:
SC/ST Students:
* Impact: Increased access to educational loans through various schemes, potentially reducing financial barriers to higher education.
* Action Required: Research and apply for suitable schemes based on eligibility criteria and educational needs.
Scheduled Commercial Banks (SCBs) and Public Sector Banks (PSBs):
* Impact: Required to adhere to RBI guidelines regarding the Model Education Loan Scheme and collateral-free loans.
* Action Required: Implement the MELS, process loan applications in accordance with guidelines, and ensure compliance with RBI circulars.
National Scheduled Castes Finance and Development Corporation (NSFDC):
* Impact: Responsible for providing concessional educational loans to eligible SC students through designated channelizing agencies.
* Action Required: Manage and disburse loan funds, monitor repayment, and ensure compliance with the scheme's terms.
State Channelizing Agencies (SCAs):
* Impact: Serve as intermediaries for disbursing NSFDC education loans to beneficiaries.
* Action Required: Process loan applications, disburse funds, and collect repayments on behalf of NSFDC.
Key Entities Referenced
National Scheduled Castes Finance and Development Corporation NSFDC: An organization under the Ministry of Social Justice and Empowerment (MoSJE) that provides education loans at concessional rates to Scheduled Castes.
Telangana: A state in India that has beneficiaries of the educational loan schemes mentioned in the document.
Ministry of Social Justice and Empowerment MoSJE: A ministry of the Government of India under which the National Scheduled Castes Finance and Development Corporation (NSFDC) operates.
Reserve Bank of India RBI: The central bank of India, which advises Scheduled Commercial Banks (SCBs) to adopt the Model Education Loan Scheme (MELS).
Model Education Loan Scheme MELS, 2022: A scheme advised by the Reserve Bank of India (RBI) to Scheduled Commercial Banks (SCBs) for providing educational loans. Last amended on 21.3.2024
Central Sector Interest Subsidy Scheme CSIS: A scheme that provides interest subsidy on educational loans, making beneficiaries eligible for collateral-free loans up to 7.50 lakhs.
Credit Guarantee Fund Scheme for Education loan CGFSEL: A scheme that provides guarantee for education loans.
PM Vidyalaxmi scheme: A scheme launched on 06.11.2024 to facilitate education loans to meritorious students admitted to Quality Higher Educational Institutions (QHEIs).
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 4063
ANSWERED ON MONDAY, 18 AUGUST, 2025/SRAVANA 27, 1947 (SAKA)
EDUCATIONAL LOANS FOR SC/ST STUDENTS
4063. SHRI MADHAVANENI RAGHUNANDAN RAO:
Will the Minister of FINANCE be pleased to state:
(a) whether educational loan is being provided to SC/ST students and if so, the details of the
scheme;
(b) whether there is any special schemes or initiatives by the Government to support SC/ST
students in accessing educational loans; and
(c) the number of students in Telangana benefited from these schemes along with the specific
benefits they have received?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SH. PANKAJ CHAUDHARY)
(a) to (b) All Scheduled Commercial Banks (SCBs) have been advised by Reserve Bank of
India (RBI) to adopt Model Education Loan Scheme (MELS), 2022 (last amended on
21.3.2024). This scheme is available for all sections of the society including SC/ST students.
The main features of the scheme are as under:
• The scheme provides need-based education loan.
• No collateral security or third-party guarantee is required for loans amount up to ₹ 7.50
lakhs, provided they are eligible for Central Sector Interest Subsidy Scheme (CSIS)/
Credit Guarantee Fund Scheme for Education loan (CGFSEL).
• No Margin for loans up to ₹ 4 lakhs.
• Moratorium period is allowed upto study period plus one year in all cases.
• Repayment period (after moratorium) is available upto 15 years for all loans.
Public Sector Banks (PSBs) also provide collateral free loans beyond ₹ 7.50 lakhs, on case to
case basis as per their Board approved policies.
Further, RBI vide circular RPCD.SME&NFS.BC.No. 69/06.12.05 /2009-10 dated April 12,
2010, on Collateral Free Loans - Educational Loan Scheme, has advised that banks must not,
mandatorily, obtain collateral security in the case of educational loans upto ₹ 4 lakh.Moreover, PM Vidyalaxmi scheme has been launched on 06.11.2024, which enables loans
through banks to meritorious students so that financial constraints do not prevent any youth of
India from pursuing quality higher education. The scheme facilitates and enables education
loans to meritorious students who get admission in the top 902 (last updated on 8.8.2025)
Quality Higher Educational Institutions (QHEIs) in the country and enables meritorious
students of these QHEIs to take collateral free, guarantor free education loans through a simple,
transparent, student-friendly application process. This scheme is available for all sections of
the society including SC/ST students.
The National Scheduled Castes Finance and Development Corporation (NSFDC), under the
aegis of Ministry of Social Justice and Empowerment (MoSJE) provides education loan, at
concessional rate of interest to persons belonging to Scheduled Castes, having annual family
income up to ₹ 3.00 lakhs, through State Channelizing Agencies (SCAs), nominated by
respective State Government/UT, and other Channelizing Agencies like Regional Rural Banks
(RRBs) and Public Sector Banks (PSBs), with whom the Corporation has signed Memorandum
of Association.
The details of educational loan are given below:
Under Education Loan Scheme, loan is provided for pursuing full-time Professional/Technical
courses in recognized institutions as one time assistance. The Educational Loan shall cover
Admission Fee, Tuition Fee, Books, Stationery, and Equipment etc.
• Maximum Loan Limit: Up to Rs.40.00 lakh for studies in India and Abroad or 90%
of course fee, whichever is less.
• Rate of Interest: NSFDC charges interest @ 2.5% from the SCAs/CAs, which in turn
charges 6.5% from the Beneficiaries.
• Repayment Period: The maximum repayment period under the Educational Loan
Scheme is Upto 12 years.
(c) As informed by RBI, as on March 31, 2025, the Credit Outstanding to SC/ST students in
Telangana by Scheduled Commercial Banks (excluding RRBs) stood at ₹247.60 crore with
0.04 lakh outstanding accounts (provisional data).
Further, an amount of ₹ 7.91 lakhs has been released to 04 students of Telangana by NSFDC,
(as on date) under educational loan scheme.
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