Dr. Ambedkar Scheme of Interest Subsidy on Educational Loan for Overseas Studies for OBCs and EBCs

What is the Dr. Ambedkar Scheme of Interest Subsidy for Overseas Studies?

Dr. Ambedkar Scheme of Interest Subsidy on Educational Loans for Overseas Studies is a Central Sector Scheme of the Ministry of Social Justice and Empowerment. The scheme meets the interest on an education loan taken by a student of the Other Backward Classes (OBC) or the Economically Backward Classes (EBC) to study abroad at Masters, M.Phil or PhD level.

According to the Department of Social Justice and Empowerment, the interest that accrues during the moratorium period is borne by the Government of India. After the moratorium the borrower pays interest normally. The subsidy is computed on a loan component of up to Rs 20 lakh; where a bank sanctions a larger loan, only Rs 20 lakh is reckoned for the subsidy.

This is not a scholarship. No cash reaches the student, the benefit is a reduction in what has to be repaid, and it exists only if there is an education loan in place from a scheduled bank under the Indian Banks' Association (IBA) Model Education Loan Scheme.

Main features

• Central Sector Scheme, fully funded by the Government of India.
• Covers 42 subjects and disciplines at Masters, M.Phil and PhD level.
• 50 per cent of the annual allocation is reserved for women students.
• Canara Bank is the nodal bank; claims are routed through the branch that gave the loan.

Who is eligible for the Dr. Ambedkar interest subsidy?

You can apply if:

• You belong to the Other Backward Classes with family income within the OBC creamy layer criteria, or to the Economically Backward Classes with total family income not exceeding Rs 2.5 lakh a year.
• You have an unconditional offer of admission for a Masters, M.Phil or PhD course abroad in one of the 42 approved disciplines.
• You have taken, or been sanctioned, an education loan from a scheduled bank under the IBA Model Education Loan Scheme.
• You can produce an income certificate covering income from all sources — your own if you are employed, or your parents' or guardians' if you are not.

You cannot apply if:

• You are going abroad for a Bachelors degree or a diploma. Only Masters, M.Phil and PhD levels are covered.
• Your family income is above the applicable ceiling. An OBC applicant in the creamy layer is not eligible, and an EBC applicant above Rs 2.5 lakh a year is not eligible either.
• You belong to the Scheduled Castes or Scheduled Tribes. EBC under this scheme means communities that are not in the SC or OBC lists; SC students are served by a separate Dr. Ambedkar Central Sector Scheme and by the National Overseas Scholarship.
• You are self-funding your studies, or funding them with a loan from a non-scheduled lender or a private financier outside the IBA scheme.
• You want the subsidy after the moratorium period has ended. The benefit applies only to interest accruing during the moratorium.

What documents are required?

How to apply for the Dr. Ambedkar interest subsidy

1. Secure an unconditional offer of admission to a Masters, M.Phil or PhD course abroad in one of the 42 approved subjects.
2. Apply for an education loan at a scheduled bank branch under the IBA Model Education Loan Scheme, and get the loan sanctioned.
3. Collect your caste certificate (OBC applicants) and an income certificate covering income from all sources for the relevant financial year.
4. Submit the interest subsidy claim form at the branch that sanctioned your loan, along with the caste certificate, income certificate, admission letter and loan documents.
5. The branch verifies the papers and forwards the claim to its head office, which routes it to Canara Bank, the nodal bank appointed by the Ministry of Social Justice and Empowerment.
6. Canara Bank consolidates claims and receives the subsidy amount from the Ministry, which is then credited against your loan account.
7. Check your loan statement after each academic year to confirm that the interest for the moratorium period has been credited, and take up any gap with your branch manager in writing.

How the interest subsidy is calculated

The moratorium period under the IBA Model Education Loan Scheme is the course period plus one year, or six months after getting a job, whichever is earlier. Interest accruing across that window is paid by the Government of India, on a loan component capped at Rs 20 lakh.

Because interest is not capitalised into the principal during the moratorium, the effect is a materially smaller repayment burden in the first years after a student returns. Beyond the moratorium, the borrower pays interest at the rate agreed with the lending bank when the loan was sanctioned, or as amended from time to time.

Related schemes and where to get help

• The National Overseas Scholarship of the same Ministry funds SC, DNT, landless agricultural labourer and traditional artisan candidates for overseas study, and pays tuition and living costs rather than loan interest.
• The Dr. Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loans for Overseas Studies for SC students is the parallel scheme for Scheduled Caste applicants.
• The Department of Social Justice and Empowerment does not publish a dedicated helpline for this scheme. Queries on a pending claim should be raised in writing with the branch manager of the bank holding the education loan, who deals with Canara Bank as the nodal bank.

Applications are free. Neither the Ministry nor Canara Bank charges a fee for the interest subsidy, and no agent can secure it, it is claimed only through the bank branch that holds the education loan.