Vidyanidhi scheme: a unique education loan from South Indian Bank

South Indian Bank offers a unique scheme by which students taking admission in academic institutions of Kerala are granted loan upto Rs. 1 lakh to enable them to pay 'refundable deposits' demanded by the educational institutions. The article discusses the details of the scheme named Vidyanidhi scheme.

Vidyanidhi scheme of South Indian Bank (a private sector bank) aims to help those meritorious students who have newly secured admission to select professional colleges in Kerala. This is a unique scheme where financial assistance as loan is provided to those students who are pursuing higher education in Kerala.


The objective of the scheme is to enable the students to pay 'refundable deposit' demanded by the educational institutions of Kerala.

Quantum of loan

The upper limit of loan under this scheme is Rs. 1.00 lakh (Loan amount isrestricted to 10% of the total tuition fees applicable for the entire course, or Rs. 1.00 lakh, whichever is lower. The loan amount is to be utilized for payment of refundable deposits only).

Applicable margin

The applicable margin in the scheme is nil, if interest is serviced periodically and 15%, margin if interest is funded.

Security and guarantor

Under this scheme, the security is Nil. The parents of the students are required to stand guarantee for the loan. If both the parents are not alive, guarantee may be obtained by the student from the guardian or from any other person having net worth not less than the loan amount.

Repayment of loan

Immediate repayment from the management of the college after completion of the course. If the interest is funded, the repayment of funded interest is to be effected by 60 EMIs, which will start one year after the qualifying examintion or six months after the student obtaining employment, whichever is earlier.

Rate of interest

Under Vidyanidhi loan scheme, the rate of interest is related to the base rate. The rate of interest is: Base rate at the time of applying + 5.20%


  • The student along with the guarantors is required to give an authorization to the bank to effect payment of the loan proceeds direct to the college management as prescribed in the prospectus.
  • The student along with the guarantors has to give an authorization to the college management through the bank branch to refund the amount direct to the bank (along with interest, if any) after completion of the course or on discontinuance of studies, whichever is earlier.


  • From the college management an irrevocable undertaking is required to be obtained for repaying the entire amount received from the bank (along with interest, if any) direct to the bank on completion of the course by the student. If for any reason, the student is unable to complete the studies due to any reason whatsoever, the payment has to be effected immediately by the management.
  • The student along with the guarantors must give an undertaking to the effect that in case of discontinuance of studies, for whatever reason, the matter will be intimated immediately to the bank branch (which earlier sanctioned the loan) in writing along with copy endorsed to the college management.

Availability of usual educational loan of the bank

A student, if he/she so desires, can also apply for educational loan under South Indian Bank's general scheme, in addition to the Vidyanidhi scheme, following the scheme parameters.

Upfront fee and penal interest

One time upfront fee is 0.50% of loan amount. The penal interest applicable in the scheme is 2%, for default of sanction terms.

Special note

Loans under the scheme are subject to the discretion of the South Indian Bank and subject to such conditions as may be stipulated by the bank. Interest rates are subject to change without notice.

For further information, the students and their guardians are advised to check the bank website

Article by Partha K.
“Those who will not reason, are bigots, those who cannot, are fools, and those who dare not, are slaves.” - George Gordon Byron

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Author: K Mohan19 Jul 2017 Member Level: Platinum   Points : 3

Great initiative by the South Indian bank coming to the help of students to pursue their higher studies with education loan and that can be easily obtained without much paper work. While I took the loan for my son for the Engineering studies, I had to go for guarantor and sureties of Central government employees which was a big challenge for me. Had I known this arrangement by South Indian Bank, I would have approached them for the loan by standing ourselves as the guarantor. The National banks must learn from the SIB and make the educational loans more accessible to the middle class section by not insisting for sureties and guarantors.

Guest Author: PARTHA KANSABANIK19 Jul 2017

I thank Mr. Mohan for reading the article. I do hope that the present article and similar articles written by me on education loan would help needy students and their guardians.

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