The Reserve Bank of India (RBI) has clarified to banks that Overseas Citizens of India (OCI) cardholders are eligible for education loan for studies abroad, provided they are residing in India.
Lenders had sought clarity from the banking sector regulator on the Model Education Loan Scheme norms and its response came last month, people familiar with the matter told ET. “The RBI also stated that an OCI residing outside India can only avail an education loan from an Indian bank for studying within the country,” said a senior bank executive, adding that lenders also informed the government about the RBI clarification on the matter in August.
An email query sent to the RBI remained unanswered till as of press time.
Another banker aware of the development said lenders had approached the regulator as there were some doubts over the treatment of such education loans. “One query was whether the loans sanctioned to an OCI residing in India should be treated under the Liberalised Remittance Scheme, or LRS, and accordingly all conditions should apply,” he said.
Under existing provisions of LRS, all resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year (April-March) for any permissible current or capital account transaction or a combination of both.
“The RBI has clarified that the LRS imposes no restriction on the remittance of domestically borrowed funds for current account transactions, including those for education purposes,” the executive said, adding that the RBI has also said that there is no upper limit on the amount that can be remitted for education under this scheme.
The senior bank executive cited earlier said the RBI has also conveyed to the banks that allowing non-resident Indians (NRIs) to borrow funds from domestic banks for utilisation outside India would amount to capital account liberalisation and, therefore, an OCI who is resident outside India can avail education loans from an Indian bank for the purpose of studying in India only.
Last month, minister of state for finance Pankaj Chaudhary had informed the Lok Sabha that for state-run banks, in terms of number of accounts and amount disbursed towards education loans, the year-on-year growth in FY24 was 17% and 14.8%, respectively.
Public sector banks (PSBs) have disbursed ₹28,699 crore towards education loans. There is no separate data available on education loans given to OCIs.
