Education bank to help students proposed

In a bid to improve enrolment rate in higher education, the HRD ministry has proposed an Education Bank to help financial institutions willing to pay loan to students at four per cent interest rate, reports Chetan Chauhan.

Published on: Feb 19, 2007, 22:57:00 IST

None | By Chetan Chauhan, New Delhi

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In a bid to improve enrolment rate in higher education, the HRD ministry has proposed an Education Bank to help financial institutions willing to pay loan to students at four per cent interest rate.

Finance Minister P Chidambaram is expected to announce education loans at four per cent interest rates in the budget. This is an outcome of a meeting with industry bodies like CII and private banks chaired by Principal Secretary to PM TKA Nair in December. The banks were willing to disburse education loan at four per cent interest rate, provided the government was willing to share the burden. At present, the interest rate on education loan hovers between 11 to 14 per cent.

In advent of the lower interest rate, the HRD ministry has worked out a mechanism to provide government assistance for the education loan. Under the plan, a bank would be set up to provide funds to the private financial institutions, a government official said.

According to officials, the bank will ensure that the students from economically weaker sections get benefited from the lower interest rate, rather than students from affluent background eating all the cake. At present, the share of the students from weaker sections seeking education loans is abysmally low. “We want to reverse this trend,” an official said.

Officials also said that most private banks prefer sanctioning education loans to students with a good paying capacity. Primarily, because the default rate in education loans is high, resulting in private banks not very keen on education loans. But, with the government chipping in, the banks are willing to reverse its policy on education loans.

The government funding for loans will not only improve the gross enrolment ratio in higher education, which is about 11 percent for all and 4-5 per cent for Scheduled Castes and Scheduled Tribes, it will also provide access to institutions like IITs and IIMs to students from the weaker section.

Working on this principle, the Planning Commission has allocated Rs one crore for setting up the bank in the financial year 2007-08. But, the main source of money for the bank is likely to be Prambhik Siksha Kosh, the account for the two per cent education cess. “Various options are being looked into including financial support from other institutions like NABARD,” a commission official said, adding that working out the modalities may take some time.

Email id Chetan Chauhan: chetan@hindustantimes.com

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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