Cooperative Banks Can Be an Alternative Source of Education Loan in India

Many students, who do not get admitted into top tier colleges and universities in India and abroad may have trouble finding education loans from traditional banks. Cooperative banks may be an option in such cases since these banks are more committed to the welfare of their members.

Sometimes, it can be difficult to get an education loan. If you have got admitted into a top college in India or abroad, banks will be more than happy to extend a loan to you. But not everyone makes it to the best colleges. Sadly, although every student has the right to receive what they need to get the education they deserve, many banks have a list of pre-approved colleges and institutes they prefer to give priority to.

This may leave many students in the lurch, as they are unable to get loans from standard commercial banks. Also, loans below 4 lakhs are relatively easier to get, but anything higher and you will need a co-applicant and tonnes of documents. But if you get admitted into unknown and unrecognised colleges or universities in India and abroad, a mountain of documents is not your only hurdle. No bank may be willing to extend a loan in such cases. What does such a student then do? How do they get an education loan to finance their education?

Did you know that you have the alternative of applying for a loan from cooperative banks?

Cooperative Bank Education Loans

There are several scheduled cooperative banks – both urban cooperative and state cooperative banks – that offer education loans. Cooperative banks run for the benefit of their members. So, as long as you take a cooperative bank membership, you can get an education loan quite easily.

Becoming a member of a cooperative bank is not all that difficult. All you need to do is buy a small number of shares of the bank. Generally, you have to buy shares at least worth INR 25,000 or 2.5 percent of the loan amount. You earn a dividend on this amount, but you can also sell off the shares after you have obtained the loan.

Many cooperative banks will lend you smaller loans (of less than 1 lakh, for some banks) on a nominal membership. A nominal membership means buying shares of a few hundred rupees.

Features of Cooperative Bank Loans

Cooperative banks also let you apply for loans of up to 20 lakhs, just like commercial banks. Most of these banks will extend loans of between 85 % and 90 % of your total education cost, which is quite attractive. Many banks (like the Maharashtra-based Saraswat Co-operative Bank) charge no processing fee for loans for an Indian education, while a small (around 0.5%) fee for education abroad. The banks that do charge processing fees will usually have a lower rate than many private lenders.

The interest rates offered are not higher than commercial banks and lenders. Rates are usually between 11 and 16 %. But note that many banks, like Saraswat Bank, charge floating rates for IBA-approved courses and fixed rates for non-approved courses. Different banks may have different conditions.

Overall, if you are applying to a less prominent college or university in India or abroad, and are having trouble finding education loans from traditional banks, you may want to consider cooperative banks. They are likely to be more flexible with regards to which student they approve loans for. As in the case of commercial banks, you will have an advantage if you have a good credit score.

Find a cooperative bank near you and walk into a branch to find out more about their education loan offerings. Or you can visit online websites and do a preliminary comparison of different banks to save yourself the trouble of wasted visits. This option is definitely worth a try if you want to live your dream, but find yourself struggling to get that education loan.

Documents and eligibility

Co-operative Banks do not follow fixed set of rules for granting and disbursement of education loan. Every bank will have its own rules. You will need to check with individual participating banks on the terms and conditions that you will have to meet. However, most co-operative banks will ask for the similar documentation as standard banks. You will need to submit your KYC documents, Aadhar card, academic documents and show proof of admission. These banks do not have as strict a loan giving policy as standard banks.

Here is a list of some co-operative banks spread in different parts of the country that offer education loans. Find one that suits your needs –

Leave a message below if you want help locating a co-operative bank near you. Remember, there are co-operative banks in every state and there is one likely close to you. Do not lose hope. All the best.

Article by Juana
Juana is a freelance writer, with years of experience, creating content for varied online portals. She holds a degree in English Literature and has worked as a teacher and as a soft skill trainer. An avid reader, she writes on a variety of topics ranging from health, travel, education and personality development.

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