Here’s another incentive for students to study hard and do well in examinations.
Good grades will make it easier for students to get education loans. The finance ministry has directed banks to ensure that meritorious students are not denied loans.
Besides, if a bank declines an application for an education loan, it needs to clearly explain the reasons. The issue was discussed at a meeting held on October 22 between finance minister P Chidambaram and chiefs of public sector banks. In the current financial year up to June 30, banks had total outstanding education loans of Rs 54,347 crore.
“We have been focusing on education loans and all branches have been instructed to strictly adhere to the norms. We try and provide loans to all, especially meritorious students, as the government’s stand is that they should not suffer due to lack of funds,” TM Bhasin, chairman and managing director, Indian Bank, said.
Chidambaram has asked banks to focus on increasing disbursement of education loans and meet their state-wise targets. At the meeting, banks were also asked to provide additional top-up loans to students who have already been granted loans once to facilitate further studies.
However, loans above RS 20 lakh may not come easy as the slowdown in the economy and the shrinking job market has led to a sharp rise in defaults on education loans. The level of bad assets in education loans has risen to over 5% from about 2% four years ago.