This clarification from the RBI ensures that OCI cardholders residing in India can pursue education abroad without unnecessary obstacles, fostering greater opportunities for international education
The Reserve Bank of India (RBI) has confirmed that Overseas Citizen of India (OCI) cardholders residing in India are eligible for education loans to study abroad. This clarification comes after several queries from banks seeking clarity on the Model Education Loan Scheme, particularly regarding OCIs. The RBI’s response was provided in August, addressing concerns raised by banking leaders on this issue.
A senior bank executive explained that the RBI’s statement highlighted a key distinction: while OCIs residing in India can apply for education loans to study abroad, those residing outside India can only access such loans from Indian banks for studying within the country. This clarification was critical as banks had uncertainties about how to handle education loans for OCIs, especially in the context of the Liberalised Remittance Scheme (LRS).
In a related development, Pankaj Chaudhary, Minister of State for Finance, informed the Lok Sabha that public sector banks disbursed ₹28,699 crore in education loans for the fiscal year 2024. Although there is no specific data available on loans granted to OCIs, overall education loan disbursements saw a year-on-year growth of 17% in terms of the number of accounts and 14.8% in terms of loan amount
One significant query revolved around whether loans granted to OCIs residing in India should be categorized under the LRS, which allows resident individuals, including minors, to remit up to $250,000 per financial year for permissible transactions. The RBI has now made it clear that LRS does not impose restrictions on remitting domestically borrowed funds for current account transactions, including educational expenses. Additionally, there is no upper limit on the amount that can be remitted for educational purposes under this scheme.
Furthermore, the RBI emphasized that allowing non-resident Indians (NRIs) to borrow funds from domestic banks for use outside India would amount to capital account liberalization. Therefore, an OCI residing outside India is eligible for education loans from Indian banks only for pursuing studies within India.
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