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financing to educational institutions

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  • financing to educational institutions
  • Eligibility
    Eligibility Educational institutions, Schools (including play schools), Colleges and other education bodies running education activities set up by Firms, Company, Trusts, Society etc. (HUF are not eligible).
  • Finance
    Nature of facility Term Loan
    Purpose Construction of building including expansion, modernization & renovation activities of the educational institution for the purpose of education.
    • Purchase of instruments meant for imparting education/ Training, purchase of Instruments or infrastructural requirements viz. furniture and fixtures, Vehicles, computers and all other equipments required for educational institutions.
    • Finance for purchase of land alone is not permissible. However, the land proposed to be purchased forming part of project shall be considered for finance (subject to minimum margin as stipulated in this policy).
  • Security/Margin
    Margin 25% of the Cost of Project (excluding cost of land).
     
    • Wherever land is also financed as part of cost of project in such cases minimum prescribed margin against cost of the land shall be 50% of the cost of the land.
    • Further, the quantum of finance against cost of the land shall be restricted to 50% of the sanctioned loan amount.
    Primary Security Hypothecation of all movable assets including furniture and fixtures, vehicles, instruments, computers and all other equipments as well as infrastructural requirements required for the institutions, not specifically charged to any other Bank/FIs.
     
    • All the cash flows of the institute shall be routed through Trust and Retention account opened with the Bank.
    • Equitable/ Registered mortgage of Land & Building of the Educational Institution (wherever permissible and not restricted by affiliating/ approval authority of education institution/ local Govt. laws/guidelines).
     

    Where Land and building of an educational institution cannot be mortgaged due to restriction from affiliating/ approval authority of education institution/ local Govt. laws/guidelines, in such alternate collateral security in the name of the institution or promoters of the institution equivalent to a minimum of 30% (in terms of RV) of the Loan Amount shall be obtained as collateral security.
    Further, in such cases, a stamped letter/ negative lien be obtained from the borrower stating that no charge will be created on the institutions property (including land for which loan is being extended) and prior permission from our Bank should be obtained before creating any kind of charge.

    Coll. Security / Security Coverage

    Equitable/ Registered mortgage of Land & Building (but not agricultural land) of other institute of the borrower (wherever permissible and not restricted by affiliating/ approval authority of education institution/ local Govt.laws/guidelines) and/or belonging to promoters viz. Trustees/ Members of the Society/Proprietor/ Partners /Directors, who shall also stand as guarantor.

    In case of partial constructed property, the realizable value of land is to considered for collateral coverage.

    Personal guarantees:

     
    • Personal guarantees of the Promoters/ Trustees/ Members of the Society/ Proprietor/ Partners /Directors (excluding professional or independent directors) of the Institution.
    • Minimum overall security (primary and collateral) coverage should not be less than 200%.(in terms of RV)
     

    Note:

     
    • While sanctioning credit facilities to the Educational Institutions, comfort should not be derived from the securities being offered. The viability of the project and cash flows of the Educational Institutions are to be relied upon while considering any credit facilities to the Educational Institutions.
  • Rate of Interest and Repayment
    ROI The Rate of Interest shall be as per the classification of the borrower i.e., MSME (classified under Priority / Non-Priority Sector) as per RBI guidelines and shall be linked to the Internal Credit Risk Rating of the borrower.
    • The Rate of Interest for the borrower that does not fall under the ambit of MSME shall be as per Internal Credit Risk Rating and External Credit Risk of the borrower (Other Conventional Loans Not Specified Elsewhere).
     

    The Rate of Interest shall be subject to reset at the time of annual review.

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