Full Form of CGFSEL

CGFSEL is the acronym for Credit Guarantee Fund Scheme for Education Loans. The Credit Guarantee Fund Trust Scheme is one of the alternatives to unsecured loans from commercial banks and NBFCs for students and micro & small firms. This article covers brief information about the scheme, terms and conditions, requirements, etc. So let’s explore more about the scheme.

Credit Guarantee Fund Scheme for Education Loans

The Government of India under the Ministry of Human Resource & Development, Department of Higher Education, introduced the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) on 16th September 2015 in the Indian Bank's Association's model. This programme is to guarantee student loans for those from economically weaker groups. The Department of Financial Services, Ministry of Finance, Government of India established the National Credit Guarantee Trustee Corporation Ltd. (NCGTC) to serve as a common trustee company for the management and operation of multiple credit guarantee trust funds, among many other things. Education loans and collateral Education loans up to Rs. 4 lakhs are collateral-free, however, under this programme, a student may borrow up to Rs. 7.5 lakh without providing any collateral or a third party guarantee. Education loans are not covered by the CGFSEL programme if the interest rate is more than 2% over the loan's base rate. According to a report, the government may increase the guarantee for student loans by 33% to Rs 10 Lakh from the present Rs 7.5 Lakh.

Requirements to Avail CGFSEL Scheme

Following are the mandatory requirements which a student should have in order to avail the CGFSEL scheme:

• The student should fall within the definition of EWS (Economically Weaker Section).
• The household should earn less than INR 4.50 lakhs annually.
• The student should have been enrolled in a reputable university, whether it was in India or overseas. After Class XII, they should have been admitted to a recognised technical or professional programme.

Key Features of CGFSEL Scheme

• The students can only benefit from the CGFSEL scheme until the duration of the course.
• Only once in a student's lifetime will they be eligible for the subsidy, either for their first bachelor's degree or for a postgraduate degree. Additionally, keep in mind that the subsidy is only available for courses in India.
• The student must provide evidence of income. For this proof, one should consult with a knowledgeable authority who has been designated by the State Government.
• On education loans under the CGFSEL scheme for sums up to INR 4 lakhs, the lender is not permitted to impose any margin fees. The lender may charge 5% as margin money for studying in India on loans worth more than INR 4 lakh and up to INR 7.5 lakhs. They may add a 15% charge for studying abroad.

Coverage of CGFSEL Scheme

• According to the Indian Banking Association (IBA) policy, the Credit Guarantee Fund Scheme would provide coverage for all school loans given to qualified applicants without the need of collateral or third-party guarantees. The loan should meet with NCGTC criteria (National Credit Guarantee Trustee Company)
• A list of recognized institutions and programmes will be eligible for the guarantee cover provided by the Credit Guarantee Fund Scheme for Education Loans.
• Before the end of the next quarter, a quarterly disbursed education loan will be eligible to apply for the guarantee cover with respect to educational loans from banks like SBI, Bank of Baroda, Axis Bank, etc.

Loans Outside the Coverage of CGFSEL Scheme

• Loans that banks allow with interest rates that are greater than 2% above the banks' base rate.
• Those loans that do not conform to the regulations, laws, rules, and guidelines established by the RBI or the Central Government.
• Those loans where the risk has already been taken care of by the government or another authority in some way.

Loan Limit Under the CGFSEL Scheme

According to the CGFSEL scheme, the maximum loan amount which can be avail is Rs 7.5 lakhs without any collateral or the third party guarantee. However, the governing body has the right to revise the loan amount limit anytime. [wp-faq-schema title=" Full Form of CGFSEL FAQs" accordion=1]