Monday, December 28, 2009

Still some banks are reluctant in giving education loans

In Thiruvananthapuram some of the banks have been reluctant in disbursing education loans even though government had instructed banks not to refuse education loan to any deserving child, and this is creating problems in inter-bank relations in some centers in the State. The matter was raised in a note circulated for discussion at the latest meeting of the State Level Bankers’ Committee (SLBC).

As per existing norms the bank branch situated nearest to the permanent residence of the applicant has to sanction the education loan. But the question of proximity has created confusion amongst the bank branches where in places many bank branches exist.

According to note the unwillingness shown by many banks in giving education loans is putting deserving candidates in to problem they have to run from one bank to the other. On the other hand the banks which are willing to give loan to students are flooded with loan applications and also have to take up application of those students who are coming from areas close to the branches of the ‘reluctant’ banks.

The note added due to this unhealthy relationship is getting created between banks, besides inconvenience the students are facing in getting education loans.

This issue brought in to notice of SLBC by the Lead Bank Manager of Ernakulam district, and has requested SLBC to issue specific guidelines in this matter to remove confusions in sanctioning education loans.

The note also stated even the rate of interest charged on education loans vary from bank to bank. Generally nationalized banks charge a lower rate of interest than private sector banks. Thus deserving candidates are forced to go in for high-interest education loans because they are staying closer to bank branches charging high interest rates.

The note has requested to provide rationalized interest rate on education loans to overcome this problem.

After the guidelines were issued by the Indian Bankers’ Association (IBA) earlier, some of the banks have reduced the amount of education loans for nursing students. This is also the reason for student’s agitation against some of the banks. At this the IBA, re-looked into the matter and allowed the banks to follow the fee structure approved by various State governments. Though some of the banks have to still issue the appropriate guidelines to their branches in this regard, the note said.

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