Banks wait for guidelines to implement the Central government’s decision

It’s been nearly 20 days since Finance Minister P. Chidambaram announced interest waiver on education loans taken before March 31, 2009 but banks are clueless whether the scheme applies to students who have paid the interest diligently.

“The guidelines are yet to be issued and we can identify the beneficiaries only after the guidelines are given,” said Sasi Kumar, Chief General Manager, State Bank of India in the State.

Banks are unable to reveal the figures of the exact quantum of beneficiaries and the amount in the State due to this dilemma, and also whether to accept the interest money if students prefer to pay now.

However, the benefit passed onto students in the State is likely to be around Rs. 700 crore with the SBI borrowers alone benefitting around Rs. 250 crores.

“We are still working out with the figures of beneficiaries and the amount. Around 19,000 students have availed the facility from SBI in the State. We have not faced much difficulty with repayments,” Mr. Sasi Kumar said.

As per the norms, the borrowers can repay a year after the course completion or six months after getting a job. However, many students use the option of paying the interest component soon after the loan is released.

Poor pay packages

Bankers say students heading to foreign destinations start the repayment on time as they finish the course in two years unlike the borrowers in India who study four-year engineering courses, and struggle to pay given the poor pay packages they get.

“Job market has been sluggish for the last few years and the scheme would help students who borrowed till 2008,” says Manohar, an education consultant.

Students who took loan prior to 2009 and plan to repay now are obviously excited with the waiver. “My burden will be lesser by nearly three lakhs,” says Lokesh, who availed loan in 2008.

As per the figures available with bankers, about 2,31,365 students had education loan accounts and Rs. 5,040 crores as outstanding till the year 2012-13 in the State. The same year 54,332 accounts were opened and Rs. 897 crores were disbursed. Projections for 2013-14 have been estimated at Rs. 6,330 crores.

Nation wide, as on March 31, 2009, outstanding education loans was Rs. 26,912.73 crore and the number of outstanding accounts was 15.8 lakh.