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Finance Minister P. Chidambaram has come to the rescue of students facing difficulty in getting education loans.
Henceforth, a bank manager will be penalised for “wilful rejection” of eligible education loan applications. At the same time, it has been decided that students securing admission under management quota will also be eligible for education loans. However, they will get loans only if they meet various criteria such as the minimum required marks, etc.
These steps are part of a new set of education loan guidelines to be issued soon.
They were discussed in a meeting called by the Finance Minister to review the performance of public sector banks.
Addressing the media after the meeting, Chidambaram said, “Bank loan is a right of students meeting all the parameters. That is why each of the applications should be received and acknowledged.”
He announced that officers receiving applications cannot reject them — only a person who is at least one level senior to the receiving officer can do so. Even then, there should be a proper reason given for rejection of the application, he said.
Pulls up bankers’ body
Banking body Indian Banks Association (IBA) has already issued a circular regarding model education loan scheme.
This has attracted the ire of the Minister. He showed his displeasure by asking the IBA to issue a revised circular incorporating various changes discussed and agreed upon.
He also announced that the Cabinet will consider the creation of a Credit Guarantee Fund in a fortnight.
This fund was announced in the Budget this year.
This scheme aims to ensure better flow of credit to deserving students.
Bad loans
Talking about Non Performing Assets (NPAs), Chidambaram allayed fears by saying that the rise in NPAs was “not alarming.” Banks are also making adequate provisions for bad debt, he said.
During the first three months of the current financial year (April-June), gross NPAs (as a percentage of gross advances) of public sector banks went up to 3.51 per cent from 2.57 per cent. Net NPAs have registered a 1.72 per cent rise, as against the 1.14 per cent rise in the same period of the previous year.
shishir.sinha
@thehindu.co.in
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