Govt’s antidote to beat SC verdict on MBBS fee

Reach agreement with banks on guarantee for students

August 30, 2017 08:11 pm | Updated August 31, 2017 07:57 am IST - THIRUVNANTHAPURAM

K.M. Abraham

K.M. Abraham

The State government would stand guarantee for those students who are unable to mobilise funds for the bank guarantee required during admissions to private self-financing medical colleges.

This was decided at a meeting between Chief Secretary-designate K. M. Abraham and representatives of the State Level Bankers’ Committee here on Wednesday. If for any reason the student or the principal guarantor is unable to pay ₹6 lakh, the government guarantee would be invoked and the payment made.

“What we have done is to completely insulate the student and the bank from any risk. I understand that this guarantee would be required for about 2,900 students who are seeking admission to private self-financing medical colleges. A government order on this would be issued immediately,” Mr. Abraham told The Hindu .

The term of the bank guarantee would be for six months and would be issued from September 5. The student should submit an application to the bank branch along with the document testified by either the college principal or the CEE that the student has received admission in a particular college. The guarantee would be given to the Principal of the self-financing college.

Paying the difference

If the Fee Regulatory Committee fixes a fee higher than ₹5 lakh the student should pay the difference or apply for a bank loan for the same. Under existing rules, banks require a “cash margin” of 15% to 100%. However, since the government is standing guarantee there would be no need for such a margin.

Moreover, the banks would not levy guarantee commission from students in the BPL category, the Scheduled Castes/Scheduled Tribes, children from the families of traditional labourers such as fishermen, cashew and coir workers and so on. It was also decided that the nationalised and scheduled banks would provide the guarantee without asking for any collateral.

According to Mr. Abraham, if the student or the principal guarantor fail to pay the money, legal proceedings would be initiated against them even as the government pays the guaranteed money of ₹6 lakh. This, he argued, was necessary to prevent unscrupulous elements from taking advantage of the government guarantee to wilfully default on the guaranteed money. “No student who seeks a bank guarantee would be turned away. We will see to that,” he added.

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