How helpful is "Insta Education Loan" by ICICI Bank?

Coronavirus-led restrictions are making companies look for innovative ways to reach their needy customers. Most of the companies are trying their best to use digital medium to engage their prospective customers. Unsecured loans were first to go fully digital as they required minimum paper processing. However, in case of other traditional loans, including home loans or auto loans, the digital process has been limited to sanction letter.

On similar lines, ICICI Bank has started offering a facility through which customers can get instant sanction letter for education loans up to Rs 1 crore to finance higher studies for themselves or their children, siblings and grandchildren in accredited colleges and universities across the world.

However before you plan a loan you should understand how it works. This facility is only for pre-approved customers. This will be available only against a fixed deposit that you hold with the bank.

You can get a loan up to 90 per cent of your fixed deposits with the Bank.  The amount varies between Rs 10 lakh and Rs 50 lakh for students seeking admission in domestic institutes. For students seeking admission in international institutes, the loan amount ranges between Rs 10 lakh and Rs 1 crore. You can opt for a repayment period of up to 10 years.

In terms of tax implication, full interest payment on the amount of 'Insta Education Loan' up to 8 years is allowed as deduction from annual taxable income, as per the Section 80E of Income Tax Act, 1961.

Sudipta Roy, Head - Unsecured Assets, ICICI Bank, said, "This facility will bring down the turnaround time for getting the sanction letter from days to a few minutes. We believe that this facility surely brings in exceptional convenience to customers as they can avail finance for higher studies without breaking their fixed deposit/savings."

It would be handy in saving time and visit for pre-approved customers as it take few days and multiple visits to get an education loan sanctioned. But if somebody needs full financing without any FD then this loan facility is not meant for them.

Many institutions, especially overseas institutions ask for bank sanction letter to admit. This facility may be handy if you have funds locked in FD which you do not wish to liquidate. If you are a pre-approved ICICI Bank customer, you can generate the sanction letter using the bank's internet banking platform. Students can furnish the sanction letter to the educational institute to confirm their admission.

The provisional sanction letter that you receive on your registered e-mail ID comes with details of the designated relationship manager. For the final disbursement of the loan, you will need to get in touch with the concerned relationship manager. After collecting required documents like admission letter, financial documents and signatures, the Bank will disburse the loan amount to the educational institution. You can also visit the nearest ICICI Bank branch for submitting the documents.

In case you need full financing, this facility is not for you as you will have to go through regular application process.

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