Padho Pardesh Scheme 2026: Discontinued, What to Use Now

The Padho Pardesh scheme, which paid the moratorium interest on overseas education loans for students from minority communities, was discontinued from 2022-23 and is not accepting applications as of October 2026. Only students who were already beneficiaries on 31 March 2022 continue to receive subsidy until their moratorium ends. If you are planning to study abroad now, the realistic options are NMDFC education loans, regular bank loans with the tax deduction on interest, state schemes and scholarships.

This guide explains what the scheme was, why it ended, what existing borrowers should check, and what to use instead.

What Padho Pardesh offered

A total of 15,722 students benefited over the scheme's last five years of operation, with beneficiaries rising from 1,711 in 2017-18 to 4,622 in 2021-22, according to the Ministry's reply in Parliament.

Status as of October 2026: discontinued

• Discontinued from 2022-23. The Ministry of Minority Affairs ended the scheme with effect from 2022-23, and the Indian Banks' Association informed banks in December 2022.
• Existing beneficiaries protected. Students who were beneficiaries as of 31 March 2022 continue to get the subsidy during their moratorium, subject to the existing guidelines.
• Reasons given. The government said in Parliament that the benefits were limited, the scheme overlapped with similar schemes of other ministries such as Social Justice and Tribal Affairs, and education loans were now available more easily at low interest.
• No replacement subsidy. Later replies in Parliament have repeated the discontinuation and pointed to other loan options. The parallel scheme for OBC/EBC students, the Dr Ambedkar interest subsidy, has also stopped taking fresh applications.

Any website or agent still "registering" students for Padho Pardesh, or asking for a fee to process it, is not genuine.

If you are an existing beneficiary

1. Ask your branch to confirm that you were on the beneficiary list as of 31 March 2022.
2. Check your loan statement for subsidy credits for each year of your moratorium.
3. Know when the moratorium ends. After that, the full EMI with interest is yours, and any unreimbursed interest may have been added to the principal.
4. Escalate unpaid eligible claims through your branch to Canara Bank, the nodal bank.

Worked example: cost of a study-abroad loan without the subsidy

Ayesha takes a ₹15 lakh bank loan for a two-year Master's abroad: ₹7.5 lakh at the start of each year, at an illustrative 10%. Moratorium = course + 1 year = 3 years.

• First tranche: ₹7.5 lakh × 3 years = 22.5 lakh-years
• Second tranche: ₹7.5 lakh × 2 years = 15 lakh-years
• Moratorium interest = 37.5 lakh-years × 10% = ₹3,75,000 (simple interest)

Under Padho Pardesh this ₹3.75 lakh would have been paid by the government. Now, over a 10-year repayment at 10% (illustrative):

What you can still claim: in the first repayment year of the ₹18.75 lakh case, interest is about ₹1,82,300. Under Section 129 of the Income-tax Act, 2025 (old Section 80E), available only in the old tax regime, all of it is deductible. At the 30% slab plus 4% cess, that saves about ₹56,900 in tax for the year.

If you qualify for a concessional loan: at a 3% rate, the same 37.5 lakh-years of moratorium would cost about ₹1,12,500 instead of ₹3,75,000. That is why it is worth checking NMDFC eligibility before signing a bank loan.

Work out your own EMI in the EMI calculator.

What to use instead in 2026

If you belong to a minority community and are also from an OBC or backward-class family, check both NMDFC and NBCFDC, as well as your state's backward-class finance corporation; eligibility, income ceilings and rates differ, and one may suit your course or family income better than the other.

NMDFC lends through state channelising agencies, and funds and terms vary by state, so apply early and get the sanction terms in writing. For costs, collateral and currency risk, see education loan in India vs abroad and our general education loan guide.

Common mistakes to avoid

• Applying on a fake "Padho Pardesh portal". The scheme had no student portal; claims were filed by banks.
• Paying an agent to get a subsidy or concessional loan sanctioned. NMDFC and bank applications are free apart from the lender's own stated charges.
• Not planning the moratorium interest. Without a subsidy, unpaid interest compounds into a larger EMI.
• Choosing the new tax regime without checking. The education loan interest deduction exists only in the old regime.

How to complain

1. For unpaid claims of an existing beneficiary, write to your branch and then the bank's grievance redressal officer.
2. If unresolved after 30 days, complain to the RBI Integrated Ombudsman at cms.rbi.org.in.
3. For scheme-level issues, file a grievance against the Ministry of Minority Affairs on pgportal.gov.in (CPGRAMS).
4. For NMDFC loans, approach the state channelising agency first, then NMDFC.

Key takeaways

• Padho Pardesh was discontinued from 2022-23; no new applications are accepted as of October 2026.
• Students who were beneficiaries on 31 March 2022 keep the subsidy only until their moratorium ends.
• Without the subsidy, moratorium interest on a ₹15 lakh abroad loan at 10% can be about ₹3.75 lakh.
• Use NMDFC loans via state agencies, bank loans with the Section 129 (old 80E) deduction, state schemes or scholarships instead.
• Ignore any portal or agent claiming to register students for Padho Pardesh.