Kerala forms a special committee for Education Loans complaints

Kerala Government has formed  special district level committees comprising of Members of Parliament (MP), Members of Legislative Assembly (MLA) and senior officials from banks to look over complaints received over education loans in the state.

The committee will listen to the complaints of applicants regarding wrongful rejection of loan application, refusal of top up loans, moratorium related ambiguities, et al. The meeting also suggested unification of interest rates offered by banks, and also students under management quota should not be denied access to credit.

There is a need of change in attitude of bank towards common man , said Mr. P.Rajiv, MP. He further added that education loans do not contribute much to slippages and NPA, it is the corporate loans which are to be blamed. However a bank official stated that some institutions offer institute offer low quality of education with unrealistic fees and banks find it difficult to advance credit to students in such colleges.

Kerala CM writes to FinMin to direct banks regarding education loans

Kerala CM Oommen Chandy recently wrote a letter to Prime Minister Dr. Manmohan Singh, who is also the Finance Minister to ask banks and Indian Banks' Association (IBA) to sanction education loans of students who have secured admissions in professional colleges in the state.

"There appears some difficulty for those candidates who have secured admission to these courses in the management quota to professional colleges here to get educational loans from the banks. When it comes to sanctioning educational loans, there should be no discrimination to those who secure admission in the management or merit quota," read the CM's letter.

This is one of the few issues on which the state assembly thinks in unison, when last month the entire state assembly wanted strict actions against banks which refuse loans to student who have secured their admissions in recognised professional colleges.

Students education loan for coaching classes.

With increasing competition for getting admissions into higher education in premier institutes across the country, there has been an increase in demand for educational loans not only for enrollment into the college, but also for getting coaching from good enterance test coaching centre.

CorporationBank has started lending to students in need of getting admission into coaching classes, while  Central Bank of India is another bank, which has taken lead in this relative new segment. The interest rates on these loans are comparable to that of education loans with the bank. The bank disburses the loan directly to the account of coaching centres authorized by the bank. Loans upto Rs. 200,000 to Rs. 400,000 can be taken and be repaid within 3 years with a 3 months moratorium.

The new product is targetted mainly towards students from rural areas, who aspire to get into good institutes, but do not have money to afford the coaching. These are unsecured loans and do not require any collateral, but require parent to become a co-borrower or have a salary account with the bank.