PSBs' education loans rise 15% in first half

NEW DELHI: If you are looking for an education loan, public sector banks (PSBs) may be your best bet. In a report to the finance ministry, the Indian Banks Association has said that education loan disbursal by the stateowned banks in the first half of this financial year has increased by Rs 4,200 crore, an increase of 15%. More than 95,000 accounts have been opened during this period.

"The loan disbursal during the period June-August is mostly high because all major institutions in India start their semesters during the period.Besides , public sector banks have been offering better terms than private sector banks and that is why the surge," said CGM Personal Banking, SBI, P Nanda Kumaran.

The total education loan disbursed by PSBs have reached around Rs 32,000 crore with 16,98,601 benefactors. The government has been concerned about the tardy approach to education loans and has sought information on it.

Three major private sector banks, AXIS, ICICI and HDFC refused to divulge their education loan portfolio. "We offer education loans but will not be able to share product details," said an ICICI spokesperson .

In the public sector space smaller banks such as Corporation Bank, Andhra Bank and Oriental Bank of Commerce has also shown a surge in their education loan portfolio.

According to a finance ministry official, who did not wish to be named, the surge is a direct implication of sops provided in the previous union budget . The government had provided for full interest subsidy for education loans taken by the weaker section. It has also extended the income-tax waiver on interest accrued on all loans covering vocational studies as well.

"There were other concessions such as low interest rate for girl students which is reflective in the figures," the official said.

Education institutes also feel that the thrust from the government encouraging banks to give more education loans has worked. "Also , more students are now comfortable with the idea of availing an education loan, which, until a few years ago, was not the case. For instance, students now prefer to take a loan and pay, whenever they get a job or graduate.