Here’s a big sigh of relief for all those students who have taken education loan so as to pursue their favourite course from a desired university. According to the announcement made by Finance Minister P Chidambaram, all the students who took loans up to 31st March, 2009 and outstanding as of 31st March, 2013 were eligible for the moratorium and approximately nine lakh borrowers shall benefit from this decision.
This decision was taken keeping in view the heavy expenditure on fees and travels that higher education courses bring along with them. Moreover, the Finance Ministry keeps a close check on the lending by public sector banks under the scheme.
As per the official data, the public sector banks have spent Rs 57,700 crore as education loans and 25,70, 254 such accounts were opened by December 31 last year. Amongst these, the largest number of accounts were opened by State Bank of India (6, 14,957), followed by Canara Bank (2, 45,155) and Indian Overseas Bank (2, 17,045).
It was stated that while banks prefer timely repayment of education loans, under the guidelines of IBA, if any student opts to leave the course half-way or has to extend the course up to a maximum period of two years, the bank can work out a new repayment schedule. In the meantime, the government is also working on a credit guarantee fund for education loans that would provide guarantee for such loans up to Rs. 7.5 lakhs. The prime objective is to offshoot banks to lend more to students without concerns over repayment or defaults.