According to the report submitted by Indian Banks Association to the finance ministry, in the first half of this financial year the state-owned banks education loan has increased by Rs 4,200 crore, an increase of 15%. PSBs opened more than 95,000 accounts during this period.
CGM Personal Banking, SBI, P Nanda Kumaran said, "The loan disbursal during the period June-August is mostly high because all major institutions in India start their semesters during the period. Besides, public sector banks have been offering better terms than private sector banks and that is why the surge."
In this fiscal PSBs had disbursed education loan of around Rs 32,000 crore in which 16,98,601 were benefited. But the government was concerned with the slow approach to education loans and has asked for clarification on it.
Amongst the private sector banks, the three major banks, AXIS, ICICI and HDFC have refused to reveal the details of their education loan portfolio. An ICICI spokesperson pointed out, "We offer education loans but will not be able to share product details."
In public sector banks increase in the education loan portfolio was observed among the smaller banks also such as Corporation Bank, Andhra Bank and Oriental Bank of Commerce.
According to anonymous finance ministry official, the increase portfolio was possible due to concessions given in the previous union budget. In the budget government had announced full interest subsidy for education loans taken by the weaker section. It also provided the income-tax waiver on interest accrued on all loans covering vocational studies as well.
The official informed, "There were other concessions such as low interest rate for girl students which is reflective in the figures."
Even education institutes felt thrust from the concession announced by the government which encouraged banks to give more education loans. "Also, more students are now comfortable with the idea of availing an education loan, which, until a few years ago, was not the case.” For instance, for pursuing higher studies now students prefer to take loan and pay, when they complete their studies or get a job.
