collateral security

Types of Properties Acceptable As Collateral Security in Banks

Higher education funding is a matter of concern for most Indian students who wish to study abroad.

Higher education funding is a matter of concern for most Indian students who wish to study abroad. The purpose of an education loan is to ease this concern and provide the required aid, without the students having to worry about their finances during the course of their studies abroad. An education loan against property borrowed from any of the government banks in India is considered to be one of the best sources of financial aid. However, many students who apply for government bank education loans often find it difficult to get their education loan in time due to two factors; slow processing time of a loan against property, and insufficient knowledge about the collateral security that can be pledged.


What is Collateral Security? What is its Importance in The Government Bank Education Loan Process?

In banking terms, collateral security refers to an asset(s) which is pledged with lenders by the borrowers for the purpose of obtaining a loan. An education loan which is provided on the basis of collateral security is called a secured education loan. Most government banks in India calculate the final secured education loan amount after considering the value of collateral security pledged by borrowers. From these details, it may be concluded that collateral security forms the very basis of any government bank education loan process.

Types of Immovable Properties That Can Be Pledged With Government Banks

  • House:
    residential properties are accepted everywhere.
  • Apartments
  • Open lands:
    It is important to note that the land must have a clear demarcation to define the boundaries. Also, agricultural lands are not acceptable as collateral security for secured education loans, under any circumstances.
  • Commercial properties:
    like shops, industrial lands, etc. These properties are only acceptable if no residential property falls within the area.

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