Tuesday, August 28, 2012

Banks to offer interest rate concessions to high scoring students


Banks would soon be offering education loans with lower interest rates for students having higher grade. Also a better grade would increase the chances of the applicant in successfully getting a loan sanctioned. This comes as a result of finance minister P.Chidambaram's meeting with heads of state owned banks. Mr. Chidambaram had asked banks to sanction education loans at lower rates for deserving students.

The banks will be getting the 'deservingness' of an applicant through credit scores derived by credit information companies. The credit rating would also depend upon the concerned educational institute.
According to the proposed plan, the credit score would depend on the students' grades, course, previous loans, institute applied and the employability.

In addition to it, the banks are also considering relaxation of norms regarding education loans for vocational courses. Presently many banks are offering high cost personal loans to students who get admissions through management quote, the finance minister has also showed his dissent on the same, stating educational loans as a right of every student who meets the criterion.

Friday, August 24, 2012

Sluggish economy results in lower demand for education loans in Haryana and Punjab


Slowed economic growth and stringent visa norms have resulted in reduced demands for education loans in Haryana and Punjab.

State Level Banker's Commitee (SLBC) compiled a data, which brought to notice that education loan disbursals in Harayana grew by a mere 0.86% annually. Punjab however fared better growing by nearly 9% for the year.

A senior banker pointed out that despite vacant positions in various universities there are no takers for education loans which is worsened by  strict visa regime from countries like Australia, US and England.

Also due to higher interest rates, many of the students preferred using their own funds rather than taking loans. Another factor which effected disbursals was depreciation of rupee against dollar, which made the education more expensive.

Tuesday, August 21, 2012

Education Loan is a right of every student : Chidambaram


Finance Minister P. Chidambaram has said that education loan is the right of every student, and public sector banks must deal with the situation seriously. Chidambaram also added that banks which reject a large number of applications would be penalized.

Chidambaram further added that the bank account is right of every individual, and reinstating that issue of education loan is close to his heart. Mr. Chidambaram also said that the decision of rejecting a loan can only be made by an officer ranked higher than the receiving officer.

This was his first meeting with the PSB chiefs since he assumed the office. The meeting discussed key agendas including timely disposal of applications, loans for diploma courses and loans for students under management quota.

"It is very important that every students who meets the parameter must get a loan because it's a right." Too many rejections of loan applications could result in action taken against the branch manager.

Wednesday, August 8, 2012

Foreign banks under pressure from RBI on priority lending


Reserve Bank of India's has directed foreign banks to maintain at least 40% of their total advances to priority sector has put a lot of strain on the banks in question. As per the order, the banks which have more than 20 branches would have to increase their priority lending from 32% to 40%.

Priority sector lending (PSL) includes sectors like farm loans, loans allied agricultural activities like food processing, educational loans,  Currently HSBC, Standard Chartered, Citibank, and Royal Bank of Scotland are the banks which have 20 or more branches.

These banks have however shown asked the RBI to allow more liberal licensing policy which would enable them to increase their reach and meet the PSL targets. RBI has set a deadline of 2018 for the banks to meet the targets.

Wednesday, August 1, 2012

Chandy seeks support from MPs to urge centre on issue of education loans


Kerala Chief Minister Oommen Chandy has seeked for support of the MPs from the state to create pressure on the Union Government to reconsider thier decision of agreeing with Indian Banks' Association's (IBA) Model Educational Loans Scheme (MELS), which prevents students under 'management quota' to get education loans.

Mr. Chandy has been against the government's decision to allow revised MELS guidelines which would put the future of thousands of students at risk, and previously branded it as “discrimination.” Mr. Chandy further added that though the centre government may have approved IBA's decision to only provide education loans to meritorious students, but the state would not accept the same. He then asked the MPs of the state to protest and ask the center to reconsider its decision.