No bank can deny educational loan if the SC/ST and MBC categories student have obtained minimum 35 per cent marks.
S Maran, belonging to SC community, had filed a writ petition before Madras High Court as the branch manager of the State Bank of Travancore in Mogappair had refused the educational loan on the ground that he had not obtained the minimum mark of 45 per cent.
In the ruling given in the favor of writ petitioner S Maran, Justice D Hariparanthaman said if the court accepts the bank argument then in Tamil Nadu, except the general category student, students belonging to SC/ST and MBC categories will not get admission in BE courses who have not obtained minimum 45 per cent marks. However, the government has prescribed only 35 per cent for admission to SC/ST students. Such prescription of lower marks for SC/ST students was done in order to achieve the objective of the constitutional goal set out in Article 46 of the Constitution. As per bank argument the very purpose of the educational loan will get defeated.
The judge said if such an (rejection) attitude was adopted for Dr BR Ambedkar, then he could have also not been able to go for higher education as he had obtained only 287 marks out of 750 in the matric exam. The judge pointed out, but the King of Baroda showed his kindness and extended financial assistance to him.
The Central government has also introduced a scheme to provide financial assistance to the weaker sections of society for their education. The judge said, it is very unfortunate that the respondent bank was denying the same citing giving one reason to another. Hence, the judge directed the bank to give the loan to the petitioner within four weeks. The judge also directed the bank to sanction the loan for the subsequent years also.
Monday, September 20, 2010
Tuesday, September 7, 2010
Finance ministry declines from immediate need for credit guarantee fund to back education loan
The ministry of finance has declined for any immediate need for credit guarantee funds to back education loan as proposed by the Indian Banks’ Association (IBA). The public sector banks have been demanding for credit guarantee fund from government as the number of defaults in education loan is increasing.
An official of the banking division of the finance ministry said, "We are not convinced that a fund needs to be created at this point. The aggregate figures that we have do not give us any cause for concern.” According to ministry the gross defaults are below 3 per cent which is ‘manageable’, therefore banks’ fears are misplaced.
During the meeting with finance minister the banks had not brought adequate data with them so the ministry has asked them to submit detailed data with to assess the actual position on default. The official said, "The banks had not come at the meeting with the finance minister with adequate data to justify their demand. We want more details before we move forward on the matter."
On August 14, the PSU chief executives had met finance minister, Pranab Mukherjee, in which IBA had put forward a suggestion for the creation of a fund to support banks on their education loan portfolio as there is increase in the repayment defaults.
After the meeting K Ramakrishnan, chief executive officer, IBA, told FC that the discussions on a credit guarantee fund for education loans was at initial stage. He said, “The proposal is in an initial stage.” However IBA did not give suggestion regarding the size of the fund.
The banks have been asked to submit a break-up of the defaults under various categories, including loans up to Rs 4 lakhs, above Rs 4 lakh and up to Rs 7.5 lakhs and those above Rs 7.5 lakhs by the finance ministry.
Currently banks are giving education loan of up to Rs 4 lakhs without any security or co-obligation of parents, for loan above Rs 4 lakhs to Rs 7.5 lakhs banks ask for co-obligation of parents along with collateral security in the form of suitable third party guarantee. Further for loans above Rs 7.5 lakhs banks ask for co-obligation of parents along with tangible collateral security for suitable value along with the assignment of future income of the student for payment of installments.
The student has to repay the loan within co-obligation of parents along with tangible collateral security for suitable value along with the assignment of future income of the student for payment of installments.
According to bankers in the coming days there is a possibility that education loan given with out security can become as a major source of defaults. In the meeting with FM bankers informed that education loan is mainly being taken by those students who are joining institutes where ratio of getting a job is very low which can lead to increase in the defaults. an official of Punjab National Bank pointed out, “Education has now become a big business. All sorts of institutes have come up and banks cannot deny loans to students and there are fears that students might not get job or not a commensurate job to pay back loan. If denied, applicants put pressure on banks from government and elsewhere.”
As per the data available with the finance ministry, at the end of March 31, 2010 the total outstanding of education loans of the 27 public sector banks amounted to Rs 34,192 crore in 18,51,106 accounts. In this SBI lead the pack which reported the total loans of Rs 8,907 crore, while Indian Bank total loans stood at Rs 2,308 crore, PNB reported Rs Rs 2,272 crore, Bank of India at Rs 1,719 crore and Andhra Bank at Rs 1,647 crore among the top five in terms of outstanding loans.
An official of the banking division of the finance ministry said, "We are not convinced that a fund needs to be created at this point. The aggregate figures that we have do not give us any cause for concern.” According to ministry the gross defaults are below 3 per cent which is ‘manageable’, therefore banks’ fears are misplaced.
During the meeting with finance minister the banks had not brought adequate data with them so the ministry has asked them to submit detailed data with to assess the actual position on default. The official said, "The banks had not come at the meeting with the finance minister with adequate data to justify their demand. We want more details before we move forward on the matter."
On August 14, the PSU chief executives had met finance minister, Pranab Mukherjee, in which IBA had put forward a suggestion for the creation of a fund to support banks on their education loan portfolio as there is increase in the repayment defaults.
After the meeting K Ramakrishnan, chief executive officer, IBA, told FC that the discussions on a credit guarantee fund for education loans was at initial stage. He said, “The proposal is in an initial stage.” However IBA did not give suggestion regarding the size of the fund.
The banks have been asked to submit a break-up of the defaults under various categories, including loans up to Rs 4 lakhs, above Rs 4 lakh and up to Rs 7.5 lakhs and those above Rs 7.5 lakhs by the finance ministry.
Currently banks are giving education loan of up to Rs 4 lakhs without any security or co-obligation of parents, for loan above Rs 4 lakhs to Rs 7.5 lakhs banks ask for co-obligation of parents along with collateral security in the form of suitable third party guarantee. Further for loans above Rs 7.5 lakhs banks ask for co-obligation of parents along with tangible collateral security for suitable value along with the assignment of future income of the student for payment of installments.
The student has to repay the loan within co-obligation of parents along with tangible collateral security for suitable value along with the assignment of future income of the student for payment of installments.
According to bankers in the coming days there is a possibility that education loan given with out security can become as a major source of defaults. In the meeting with FM bankers informed that education loan is mainly being taken by those students who are joining institutes where ratio of getting a job is very low which can lead to increase in the defaults. an official of Punjab National Bank pointed out, “Education has now become a big business. All sorts of institutes have come up and banks cannot deny loans to students and there are fears that students might not get job or not a commensurate job to pay back loan. If denied, applicants put pressure on banks from government and elsewhere.”
As per the data available with the finance ministry, at the end of March 31, 2010 the total outstanding of education loans of the 27 public sector banks amounted to Rs 34,192 crore in 18,51,106 accounts. In this SBI lead the pack which reported the total loans of Rs 8,907 crore, while Indian Bank total loans stood at Rs 2,308 crore, PNB reported Rs Rs 2,272 crore, Bank of India at Rs 1,719 crore and Andhra Bank at Rs 1,647 crore among the top five in terms of outstanding loans.
Monday, August 30, 2010
Tamil Nadu is the largest education loan distributer in the country
Indian Overseas Bank (IOB), convener for District Consultative Committee of Sivaganga and Pudukottai districts organized an educational loan campaign in Tamil Nadu. Union Home Minister P. Chidambaram in his addressing speech said in India about 20 lakh education loans are given, out of this Tamil Nadu alone accounts for 5.63 lakh. Thus Tamil Nadu accounts for one out of every four education loans given in the country. Whereas, he said the states which are bigger than Tamil Nadu have lower loan rates.
The Minister pointed out that around 70 per cent of the loan beneficiaries at this camp belong to economically backward section of the society including children of casual laborers, car divers and peons, thus the education loan scheme introduced by the Central government has proved to be of great benefit for the economically backward sections.
He added, recently launched interest waiver scheme by the government will cover the education loans taken since 2009-10. In case the bank has charged interest inadvertently, bank will offset it against later payments. If parents find any difficulty in getting loan for their children they can lodge complaints with Canara Bank, the nodal agency appointed by the government for the implementation of the scheme nationwide.
In the camp, education loan of around Rs 10.41crore was disbursed to 643 students the stalls were put up by public sector banks of Sivaganga and Pudukottai districts.
The Minister pointed out that around 70 per cent of the loan beneficiaries at this camp belong to economically backward section of the society including children of casual laborers, car divers and peons, thus the education loan scheme introduced by the Central government has proved to be of great benefit for the economically backward sections.
He added, recently launched interest waiver scheme by the government will cover the education loans taken since 2009-10. In case the bank has charged interest inadvertently, bank will offset it against later payments. If parents find any difficulty in getting loan for their children they can lodge complaints with Canara Bank, the nodal agency appointed by the government for the implementation of the scheme nationwide.
In the camp, education loan of around Rs 10.41crore was disbursed to 643 students the stalls were put up by public sector banks of Sivaganga and Pudukottai districts.
Thursday, August 19, 2010
HRD ministry fears, education loan interest subsidy program may have failed
UPA government grand education loan interest subsidy program seems to have failed. According to the HRD ministry it has not received any reimbursement claim from the member scheduled banks so far. In fact ministry is flooded almost daily with complaints from students, parents and even MPs, occasionally, on behalf of constituents, that banks are not assisting students. The HRD ministry has requested Pranab Mukherjee’s finance ministry to intervene in the matter.
However interest subsidy scheme was a key component of the UPA’s Common Minimum Program in 2004 and the Congress manifesto in 2009, and the scheme was launched in the same year after the coalition returned to power.
The current scheme by the government says that it would pay the interest on education loans for professional courses during the course of study along with the moratorium period for families having income of less than 4.5 lakh a year. The moratorium period consists of the course duration and one year after, unless the student finds a job earlier.
Also, banks are to ask for reimbursements for interest subsidies through the HRD ministry at the end of each half-year or end of the academic year.
The HRD ministry has also written a letter to the finance ministry dated August 9, asking it to intervene in the issue and direct them to submit claims at the earliest. The letter says, “The scheme is effective from the academic year 2009-10 and this ministry has not received any claim from the member scheduled banks so far.”
A series of letters has also been sent to over 150 member banks of the Indian Banks Association implementing the scheme.
On the other hand, according to sources, “Banks are usually prompt to claim their due and we are concerned about the implementation of the scheme. The details of claims — if any — will at least tell us how far the scheme has been implemented and how many students it has benefited.”
However interest subsidy scheme was a key component of the UPA’s Common Minimum Program in 2004 and the Congress manifesto in 2009, and the scheme was launched in the same year after the coalition returned to power.
The current scheme by the government says that it would pay the interest on education loans for professional courses during the course of study along with the moratorium period for families having income of less than 4.5 lakh a year. The moratorium period consists of the course duration and one year after, unless the student finds a job earlier.
Also, banks are to ask for reimbursements for interest subsidies through the HRD ministry at the end of each half-year or end of the academic year.
The HRD ministry has also written a letter to the finance ministry dated August 9, asking it to intervene in the issue and direct them to submit claims at the earliest. The letter says, “The scheme is effective from the academic year 2009-10 and this ministry has not received any claim from the member scheduled banks so far.”
A series of letters has also been sent to over 150 member banks of the Indian Banks Association implementing the scheme.
On the other hand, according to sources, “Banks are usually prompt to claim their due and we are concerned about the implementation of the scheme. The details of claims — if any — will at least tell us how far the scheme has been implemented and how many students it has benefited.”
Wednesday, August 4, 2010
Gujarat witness sharp fall in disbursal of education loan
In Gujarat the number of education loan takers has increased in the last financial year (FY), as compared to the previous fiscal. In FY 2009-10, but there has been decline in the education loan disbursement by 42%, in the financial year 2009-10 as compared to the previous year as few students opted for going abroad for studies.
In 2008-09 banks in Gujarat disbursed Rs581.62 crore to students as education loans, in 2009-10, this came down to only Rs332.37 crore, a decline of Rs249.25 crore in absolute terms.
In FY 2009-10, around 12,663 students took education loans from banks while in the previous year the number of such students was 11,296 hence in FY 2009-10, there was a growth of 12% in the number of bank accounts for the same.
According to overseas education consultants and banking experts looking at the figures it is clear that fewer students opted for going abroad for higher education but there has been increase in demand for education loans from students who have joined not-so-big institutes.
P Nandakumaran, chief general manager, State Bank of India (SBI) said, "It seems the demand for education loans is coming more from students joining the not so-premium institutions." He added that, earlier, the students taking admission in premium educational institutions mainly took education loan but now this is not the case.
This financial year the sharp fall in disbursal of education loan has been noticed in SBI’s education loan. In the quarter ending March 2009, SBI had disbursed around Rs305.10 crore to 569 students in the state. While in the March 2010 quarter it came down to just Rs15.32 disbursed to 959 students.
MK Jain, SLBC convener and general manager, Dena Bank pointed out that decline in the amount of disbursal of education loan may be because few students have opted to go abroad for higher studies. Jain said, "The maximum amount given by banks as education loan is Rs20 lakh. The number of students applying for this maximum amount has gone down."
Tanu Seth, office manager, 'Study Overseas', supported Jain's views. She said there has been decline of about 40% in the number of students going abroad for studies. She said the reason for decline may be recession. Seth said, "Only two out of 10 students coming to us are interested in obtaining an education loan, as they usually do not have liquid assets to show as collateral."
In 2008-09 banks in Gujarat disbursed Rs581.62 crore to students as education loans, in 2009-10, this came down to only Rs332.37 crore, a decline of Rs249.25 crore in absolute terms.
In FY 2009-10, around 12,663 students took education loans from banks while in the previous year the number of such students was 11,296 hence in FY 2009-10, there was a growth of 12% in the number of bank accounts for the same.
According to overseas education consultants and banking experts looking at the figures it is clear that fewer students opted for going abroad for higher education but there has been increase in demand for education loans from students who have joined not-so-big institutes.
P Nandakumaran, chief general manager, State Bank of India (SBI) said, "It seems the demand for education loans is coming more from students joining the not so-premium institutions." He added that, earlier, the students taking admission in premium educational institutions mainly took education loan but now this is not the case.
This financial year the sharp fall in disbursal of education loan has been noticed in SBI’s education loan. In the quarter ending March 2009, SBI had disbursed around Rs305.10 crore to 569 students in the state. While in the March 2010 quarter it came down to just Rs15.32 disbursed to 959 students.
MK Jain, SLBC convener and general manager, Dena Bank pointed out that decline in the amount of disbursal of education loan may be because few students have opted to go abroad for higher studies. Jain said, "The maximum amount given by banks as education loan is Rs20 lakh. The number of students applying for this maximum amount has gone down."
Tanu Seth, office manager, 'Study Overseas', supported Jain's views. She said there has been decline of about 40% in the number of students going abroad for studies. She said the reason for decline may be recession. Seth said, "Only two out of 10 students coming to us are interested in obtaining an education loan, as they usually do not have liquid assets to show as collateral."
Thursday, June 10, 2010
NEFC to provide student loans at low interest
The Ministry of Human Resources and Development has written to the heads of the scheduled commercial banks to implement interest subsidy scheme on education loans for poor students pursuing higher studies. Now Kapil Sibal is planning to ask state governments to share with the Centre financial burden of starting a new agency that will offer soft loans to newly upcoming education institutions and students.
But the states are already complaining about the inadequate funds to implement the historic right to education law and have been demanding for additional funds from the Centre therefore this move of human resource development minister can increase their cries of distress.
On the other hand such helplessness will only help the minister in projecting the Centre as the lone fighter for education reforms in the country, a role that forms the part of several Sibal policies.
According to top government sources Sibal will be asking state education ministers to give financial support to the proposed National Education Finance Corporation (NEFC) in a meeting to be held on June 18.
A source said, “It is a win-win situation for the Centre. If states help in funding the NEFC, it reduces our financial bill. If not, it strengthens our position at a time when we face opposition from them on other education reforms.”
However several state governments, including Bengal and Tamil Nadu, have raised apprehension over the powers of the proposed NEFC. Thus, their apprehensions will be discussed by the Central Advisory Board on Education (CABE) — which includes all state education secretaries and the HRD ministry. The meeting will be held on June 19, a day after the NEFC is discussed.
The CABW will also take up discussion on fund-sharing arrangement between the Center and states for the right to education law, the other area of contention.
Earlier, in the Eleventh Five-Year Plan (2007-12) the promised NEFC is seeing along the lines of the National Bank for Agriculture and Rural Development (Nabard), which is providing assistance to self-help groups by offering small loans.
As per the HRD ministry’s draft, the funds to NEFC will be provided through three sources - budgeted funds, a higher education cess already in place but unused, and bonds gift-wrapped in tax concessions. In case states agree to give financial support, the Centre might reduce its budgetary allocation for the NEFC.
The proposed lending agency will be providing student loans at low interest. The arrangement will be implemented parallel to an existing scheme that subsidizes education loans.
The NEFC will also give financial support to the new upcoming government and private higher educational institutions.
According to sources Sibal will put forward his argument that as state government –run institutions will also get benefit from NEFC loans, therefore they should try and give financial support to the proposed agency.
But the states are already complaining about the inadequate funds to implement the historic right to education law and have been demanding for additional funds from the Centre therefore this move of human resource development minister can increase their cries of distress.
On the other hand such helplessness will only help the minister in projecting the Centre as the lone fighter for education reforms in the country, a role that forms the part of several Sibal policies.
According to top government sources Sibal will be asking state education ministers to give financial support to the proposed National Education Finance Corporation (NEFC) in a meeting to be held on June 18.
A source said, “It is a win-win situation for the Centre. If states help in funding the NEFC, it reduces our financial bill. If not, it strengthens our position at a time when we face opposition from them on other education reforms.”
However several state governments, including Bengal and Tamil Nadu, have raised apprehension over the powers of the proposed NEFC. Thus, their apprehensions will be discussed by the Central Advisory Board on Education (CABE) — which includes all state education secretaries and the HRD ministry. The meeting will be held on June 19, a day after the NEFC is discussed.
The CABW will also take up discussion on fund-sharing arrangement between the Center and states for the right to education law, the other area of contention.
Earlier, in the Eleventh Five-Year Plan (2007-12) the promised NEFC is seeing along the lines of the National Bank for Agriculture and Rural Development (Nabard), which is providing assistance to self-help groups by offering small loans.
As per the HRD ministry’s draft, the funds to NEFC will be provided through three sources - budgeted funds, a higher education cess already in place but unused, and bonds gift-wrapped in tax concessions. In case states agree to give financial support, the Centre might reduce its budgetary allocation for the NEFC.
The proposed lending agency will be providing student loans at low interest. The arrangement will be implemented parallel to an existing scheme that subsidizes education loans.
The NEFC will also give financial support to the new upcoming government and private higher educational institutions.
According to sources Sibal will put forward his argument that as state government –run institutions will also get benefit from NEFC loans, therefore they should try and give financial support to the proposed agency.
Thursday, June 3, 2010
Central Bank of India to provide educational loan to LPU students
The Central Bank of India and Lovely Professional University have signed an MOU under which educational loans will be provided to the aspiring, deserving and brilliant students who cannot afford to pursue higher studies due to financial limitation.
The loan will be disbursed through a single-window clearance facility at nominal and lowest possible interest rates. The girl-students will be provided loan at lower rate of interest in comparison to others. Bank will open a counter in the campus so that students can avail loan easily and for speedy disbursal of loan.
The General Manager of the Central Bank of India, R. Mishra & AGM SC Bhayana was present to sign this MOU. After signing MoU Mishra said, “Education is a fundamental right of each and every denizen of India. However, many of the good students remain devoid of higher studies due to their economic conditions or other types of imposed upon financial constraints. Our bank has taken a great step in this regard by trying to make the loan-procedure very easy. A student will be able to get loan from any of the 3400 branches of our bank through out India.”
On this occasion, the Chancellor of the University Ashok Mittal said: “Such collaboration would result in supporting brilliant students, lacking financial support and opportunity, to complete their studies. It is often seen that in-spite of students’ strong willingness their parents could not let them join the desired program of study due to want of money. This MOU is certainly going to prove as a great boon to all such parents and students as procedure in acquisition of the normal loan to continue a programme have been made very easy. Also, CBoI will open a counter in the campus to facilitate the students in the campus itself for speedy disbursal of education loan. ”
The loan will be disbursed through a single-window clearance facility at nominal and lowest possible interest rates. The girl-students will be provided loan at lower rate of interest in comparison to others. Bank will open a counter in the campus so that students can avail loan easily and for speedy disbursal of loan.
The General Manager of the Central Bank of India, R. Mishra & AGM SC Bhayana was present to sign this MOU. After signing MoU Mishra said, “Education is a fundamental right of each and every denizen of India. However, many of the good students remain devoid of higher studies due to their economic conditions or other types of imposed upon financial constraints. Our bank has taken a great step in this regard by trying to make the loan-procedure very easy. A student will be able to get loan from any of the 3400 branches of our bank through out India.”
On this occasion, the Chancellor of the University Ashok Mittal said: “Such collaboration would result in supporting brilliant students, lacking financial support and opportunity, to complete their studies. It is often seen that in-spite of students’ strong willingness their parents could not let them join the desired program of study due to want of money. This MOU is certainly going to prove as a great boon to all such parents and students as procedure in acquisition of the normal loan to continue a programme have been made very easy. Also, CBoI will open a counter in the campus to facilitate the students in the campus itself for speedy disbursal of education loan. ”
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