No bank across India implementing the UPA’s grand education loan subsidy programme has sought any government reimbursement yet, triggering fears that the scheme may have failed students in its very first year.
Flooded almost daily by complaints from students and yet to receive any claims from banks, a desperate human resource development ministry has asked Pranab Mukherjee’s finance ministry to intervene, government sources have told HT.
The interest subsidy scheme was a key component of the UPA’s Common Minimum Programme in 2004 and the Congress manifesto in 2009, and was launched after the coalition returned to power.
Under the scheme – launched in 2009 – the government pays the interest on education loans for professional courses during a moratorium period for students with a combined family income of less than R 4.5 lakh a year. The moratorium period consists of the course duration and one year after, unless the student finds a job earlier.
Banks are expected to seek reimbursements for interest subsidies through the HRD ministry at the end of each half-year or end of the academic year.
In a letter dated August 9, the HRD ministry asked the finance ministry to urge banks to submit claims at the earliest – a rare case of the debtor demanding that he repay to an apparently uninterested lender. “The scheme is effective from the academic year 2009-10 and this ministry has not received any claim from the member scheduled banks so far,” the letter says.
The letter follows a series of letters to over 150 member banks of the Indian Banks Association implementing the scheme, asking them to put in place all mechanisms to help students.
But the letters to banks have not stopped a flow of complaints from students, parents and even MPs, occasionally, on behalf of constituents, informing the HRD ministry that banks are not assisting students.
“Banks are usually prompt to claim their due and we are concerned about the implementation of the scheme. The details of claims — if any — will at least tell us how far the scheme has been implemented and how many students it has benefited,” a source said.