Govt nudges banks to give more education loans

With Public sector banks wary of disbursing low-value education loans claiming defaults, the Government has asked them to increase disbursement, citing several complaints received from various quarters on delay in sanction and denial on “flimsy grounds”, has learned.

An official source said the issue was discussed in a meeting held recently by the Department of Financial Services (DFS) and involving representatives of all 12 PSBs. Banks were told that the department has received a lot of complaints from a range of quarters, including the highest levels in the government. “They were asking to increase education loan disbursement,” said the source.

The banks were told to disburse education loans within the stipulated time of 15-30 days, not to deny loans on “flimsy grounds”, such as CIBIL score of co-borrower and non-eligibility of courses, and not to seek collateral security for such loans up to Rs 7.5 lakh.

Banks were also asked to guide education loan seekers on the Central Sector Interest Subsidy Scheme for students with an annual family income of up to Rs 4.5 lakh.