NHFDC - Educational Loan

The National Handicapped Finance and Development Corporation or NHFDC was established by the Ministry of Social Justice and Empowerment, Government of India, as a Non-profit company registered under Section 25 of the Companies Act, 1956. NHFDC is managed by the Board of Directors and it functions as an Apex institution in transferring the funds to differently abled people through the State Channelising Agencies (SCAs). In this article, we look at the education loan scheme offered by the NHFDC in detail. Know more about income tax deductions for disability.

Objectives of NHFDC

The objectives of NHFDC are mainly for the benefits of the people with disabilities. They are as follows.

To promote economic development activities
To promote self-employment and other ventures
To extend loans to pursue education
To assist in the upgradation of technical and entrepreneurial skills
To assist self-employed individuals

Educational Loans

NHFDC provides Indian citizens with an educational loan to pursue higher studies in India or abroad. Indians with 40% or more disability are eligible for getting educational loan from NHFDC.

Eligible Courses

All types of courses that fall under the below categories are eligible under the NHFDC education loan scheme.

Graduation courses/ Post graduation courses/ Professional courses
Other courses approved by UGC/Government/AICTE etc.

Qualifying Expenses

The following expenses are also covered under the scheme to help the student to complete his/her education.

Fee that has to be paid to the college/school/hostel
The Examination/Library/Laboratory fee
Fee required to purchase books/equipment/instruments/uniforms
Caution Deposit/Building Fund/Refundable Deposit
To purchase computers to complete the course
Cost of a Two-wheeler up to Rs. 50,000/-
Other fee requirements to be paid for study tours, project work, assistive devices, etc.

Procedure for Receiving Loan

An application regarding the loan sanction has to be submitted in the prescribed format to the State Channelising Agency as authorized by the National Handicapped Finance and Development Corporation. A fee of Rs. 5000 has to be deposited for educational loans for students who pursue education abroad and this will be adjusted with the margin money.

Sanctioning of Loan

Loans for students are granted under two categories. They are

Rs. 10 lakhs will be granted for students pursuing education in India.
Rs. 20 lakhs will be granted for students pursuing education in foreign countries.

An interest rate of 4% per annum will be applicable and a rebate of 0.5% on interest is available to women beneficiaries.

Repayment of Loan

There are certain regulations that have to followed for repaying the loan.

Loan under the scheme must be repaid within 7 years.
Repaying of the loan has to be started one year after the student has completed studies or after six months after acquiring a job.
Interest for term loans would be started from the date of payment of the loan by the NHFDC.
If the loan has to be extended by the Corporation, a simple interest would be imposed on the loan amount at the prescribed or applicable rate at the moratorium period and if there are any unpaid interests, it shall be increased and will be charged at the commencement of repayment of the loan at par with term loan.
The same interest would be charged for loans that are already sanctioned under this scheme.
The recipient has to submit the copy of marks sheet after every term or semester to the SCA.

Collateral Security

For loan of upto Rs.4 lakhs, no collateral security is required. For loan of upto Rs.7.5 lakhs, a third party guarantee would be required. In exceptional cases, third party guarantee can be waived if the officer granting the loan is satisfied with the net-worth/means of parents who would be executing the documents as "joint borrower". For loan above Rs.7.5 lakhs, tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments is required.