Priority sector lending may include PC financing

NEW DELHI: For students striking out on their own, there is some good news. PC loans may become cheaper and easier to access, if the ministry of communication & information technology has its way. The ministry wants PC financing to be included in priority sector lending. This would enable banks to offer lower interest rates on PC financing.

The proposal has been sent to the Planning Commission for inclusion in the Eleventh Five-Year Plan. ���It is likely that the proposal will be accepted in the 2007-08 Budget,��� said an official of the ministry.

The ministry aims to increase PC penetration in the country from 18 per thousand to about 60 per thousand by 2011-12 and the proposal is aimed to achieve the target, the official added. Most banks in the country either offer exclusive microfinance PC loans or include PCs in packages like student loans. According to a study by HCL, the average interest rates offered by banks for PCs in the personal loan category are as high as 18-19%.

The demand for cheap loans is, however, testimony to the fact that there is a need to lower interest rates for PC loans. A recently launched student PC loan by Oriental Bank of India, offering an interest rate of 9.5%, fuelled a 40% growth in PC loans in three months since the offer was in force. Punjab National Bank���s package consumer loans that cover PCs have also seen a growing demand.

Yet, a few banks offering cheap loans doesn���t seem to have done enough justice to potential users at home. According to industrial sources, the potential of the PC home market in India is yet to be harnessed.

���For years now, the size of the home market has been stagnant at 25%,��� Vinee Mehta, executive director, Manufacturers��� Association of Information Technology (MAIT), said. For an average student in the country, in terms of his income levels, an easy and affordable EMI, say Rs 400 per month, can nullify the adverse upfront payment of Rs 25,000, he added.