Education loans are extended as per Model Educational Loan Scheme of Indian Banks™ Association (IBA), as adopted by the Banks.
As per the Model Scheme, scheduled banks may, with the consent of the student, arrange for life insurance policy of the student availing Education Loan. In case of death of the student, loan amount outstanding is paid by the Insurance Company. The Model Scheme is modified from time to time in consultation with various stakeholders including Government of India. The last such revision was made in September, 2012.
This was stated by Minister of State for Finance, Shri Namo Narain Meena, in written reply to a question in the Lok Sabha.
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