New Delhi: Banks are seeking clarity from the government on treatment of education loans for students enrolled at foreign institutions operating in GIFT City in Gujarat.
Currently, courses taught in these colleges are completed in India, but the loans are classified as "studies abroad". This has led lenders to approach the Centre since they want to make changes in the model education loan scheme (MELS) and ensure a uniform policy including waiver of visa requirement during loan sanction or disbursal, a prerequisite for approving foreign education loans, said people familiar with the developments.
"The issue was discussed in an internal meeting of lenders in December, and through the Indian Banks' Association (IBA), the issue was flagged, and approval was sought from the government in order to make suitable changes to MELS," said a bank executive requesting anonymity.
The MELS was formulated by the IBA and last amended in April 2024.
"If the overseas institution awards the degree, and fees are remitted in foreign currency, then the treatment of such loans is equivalent to studies abroad and will follow existing remittance guidelines," said another executive.
RBI guidelines stipulate that for payment of fees for education to foreign universities or foreign institutions in IFSCs, resident individuals can open a foreign currency account in IFSCs.
IFSCA regulations allow foreign universities and educational institutions to open international branch campuses (IBC) and offshore education centres (OEC) in the GIFT International Financial Services Centre (GIFT IFSC).
So far, approvals have been accorded to five universities from the UK, Australia, and Northern Ireland.
As per existing rules, only foreign universities featuring within top 500 in the QS World University Rankings-either in global ranking or subject ranking-are eligible.
Currently, courses taught in these colleges are completed in India, but the loans are classified as "studies abroad". This has led lenders to approach the Centre since they want to make changes in the model education loan scheme (MELS) and ensure a uniform policy including waiver of visa requirement during loan sanction or disbursal, a prerequisite for approving foreign education loans, said people familiar with the developments.
"The issue was discussed in an internal meeting of lenders in December, and through the Indian Banks' Association (IBA), the issue was flagged, and approval was sought from the government in order to make suitable changes to MELS," said a bank executive requesting anonymity.
The MELS was formulated by the IBA and last amended in April 2024.
"If the overseas institution awards the degree, and fees are remitted in foreign currency, then the treatment of such loans is equivalent to studies abroad and will follow existing remittance guidelines," said another executive.
RBI guidelines stipulate that for payment of fees for education to foreign universities or foreign institutions in IFSCs, resident individuals can open a foreign currency account in IFSCs.
TAKE NOTE Loans classified as ‘studies abroad’
IFSCA regulations allow foreign universities and educational institutions to open international branch campuses (IBC) and offshore education centres (OEC) in the GIFT International Financial Services Centre (GIFT IFSC).
So far, approvals have been accorded to five universities from the UK, Australia, and Northern Ireland.
As per existing rules, only foreign universities featuring within top 500 in the QS World University Rankings-either in global ranking or subject ranking-are eligible.
