Mumbai: India’s largest lender, State Bank of India (SBI), is planning to slash lending rates for education loans by 0.25% as early as this week.
SBI plans to announce the rate cut early this week, enabling students who take loans from 1 May to 30 September, avail the benefit of reduced rates, an SBI official said.
“The idea is to help students aspiring for higher studies with adequate financial support. Interest rates on all category of education loans are likely to come down by 0.25%. The scheme will be applicable for all education loans approved during May-September, 2009,” the official said.
SBI currently offers education loans for rates ranging from 11.75% to 13.25%. Female students can avail loans for a 0.5% less rate across all categories.
While education loans up to Rs4 lakh do not require any collateral security, those between Rs4 lakh and Rs7.5 lakh would require a third-party guarantee.
For loans above Rs7.5 lakh and up to Rs20 lakh, borrowers will have to produce some tangible assets such as a house or land as security. The loan re-payment period ranges from five to seven years.
SBI has an education loan portfolio of Rs6,600 crore and has seen its portfolio growing by around 50% in the past one year, the official said.
“We had targeted a growth (in education loans) of 35% in FY09 but has far exceeded that target on account of a good demand,” the official said.
The bank gives loans up to Rs10 lakh for studies in India and up to Rs20 lakh for courses abroad.
“The economic downturn did not have any impact on this segment. Infact we have received more loan enquiries in the past few months. The demand for education loans is likely to go up in the months ahead,” the official said.
SBI has recently slashed rates in various categories such as SME, vehicle and home loans with a view to improve the credit flow to the market.