Security is not required to if the loan taken is less than Rs. 4.00 Lacs. However, if the education loan is above Rs.4.00 Lacs and within Rs.7.50 Lacs, a suitable third party guarantee should be given as collateral.
If the loan is above Rs.7.50 Lacs and up to Rs. 10 lakhs, collateral security in the form of immovable property or a collateral such as Government securities/NSCs/Units of UTI of suitable value is to be provided along with an assignment of future income of the student for paying instalments.
Security can be offered in the form of gold, land/buildings/Govt. securities/Public Sector Bonds/Units of UTI, KVP, NSC, life policy, shares/debentures, bank deposit with a suitable margin for loaning against the securities, etc. In the case of minors, the parent/guardian will execute the documents on behalf of the minor and also in his capacity as co-borrower. Security in the form of parents/guardians/third party guarantee can be placed where sufficient collateral security is not available.