Education loan subsidy to help banks clean loan books
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Mumbai: State Bank of India (SBI), which has over Rs.9,000 crore in its education loan book, said on Monday that the four-year moratorium on education loans announced in the interim budget will help banks regularize their loan accounts.
“The finance minister’s announcement augurs well for banks to regularize educational loan accounts which went irregular due to loss of growth momentum in the economy and decline in job opportunities,” SBI chief economic adviser Soumya Kanti Ghosh said.
Consulting firm Deloitte India said the moratorium on education loans taken up to March 2009 and outstanding as of end December-2013 will help a lot of students in realizing their dreams for higher education. “This hopefully should encourage our students to fulfil their academic ambitions by utilizing educational loans and in the process enable the country to improve its gross enrollment ratio in higher education,” Deloitte Haskins and Sells Partner K.R. Sekar said.
In the budget, finance minister P. Chidambaram proposed a moratorium period for all education loans taken up to 31 March 2009 and outstanding as of 31 December 2013. The government will take over the liability for outstanding interest as on December 2013, but the borrower will have to pay interest for the period after 1 January 2014. The Centre will provide a sum of Rs.2,600 crore in the current fiscal year itself towards the proposal. The move is likely to benefit 900,000 student-borrowers to the tune of Rs.2,600 crore in the moratorium period.