PSBs disbursed Rs 28,700-crore education loan for higher studies in FY24

Further, there was a 17 percent y-o-y jump in the number of loan accounts from 6,29,594 in 2022-23 to 7,36,580 in 2023-24.

Public sector banks (PSBs) have observed a year-on-year (Y-o-Y) growth of 14.8 percent in the amount disbursed for education loans for the higher studies, the Lok Sabha was informed on August 5.

PSBs disbursed Rs 24,997 crore in 2022-23 and Rs 28,699 crore in 2023-24, Minister of States for Finance, Pankaj Chaudhary said.

Further, there was a 17 percent y-o-y jump in the number of loan accounts from 6,29,594 in 2022-23 to 7,36,580 in 2023-24.

The minister said all Scheduled Commercial Banks (SCBs) have been advised by the Reserve Bank of India to adopt the Model Education Loan Scheme, formulated by the Indian Banks’ Association (IBA).

Among other benefits, the scheme provides a need-based education loan where no collateral security or third-party guarantee is required for loans amounting up to Rs 7.50 lakh, provided they are eligible for the Central Sector Interest Subsidy Scheme (CSIS)/ Credit Guarantee Fund Scheme for Education loan (CGFSEL).

The Ministry of Education (MoE) implements CSIS, which provides full interest subsidy till a moratorium (course period plus one year) on educational loans up to Rs 10 lakh availed under the Model Educational Loan Scheme by students of Economically Weaker Section (EWS) with family income up to Rs 4.50 lakh.

The question was raised by Shiv Sena (Uddhav Balasaheb Thackrey) MP Sanjay Uttamrao Deshmukh and DMK MP Eswarasamy K on whether non-agricultural land of a student is mortgaged by each bank at the time of sanctioning and disbursing the educational loan.

“PSBs have further informed that non-agricultural land is taken as collateral for the loans, as agricultural land is not compliant to Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002,” the Minister said in a written reply.

Besides, he added that the Union Budget 2024-25 has inter alia provided for financial support in the form of annual interest subvention of three percent of the loan amount for loans up to Rs 10 lakh for higher education in domestic institutions, for 1 lakh youth who have not been eligible for any benefit under government schemes and policies.