Student loan burden eases

The moratorium is for all education loans taken up to March 31, 2009, and outstanding at the close of the 2012-13 fiscal. The student-borrowers would have to pay interest from January 1, 2014.

With an eye on the country’s youth bulge, Union Finance Minister P. Chidambaram on Monday proposed a moratorium period for all education loans taken up to March 31, 2009, and outstanding at the close of the 2012-13 fiscal. However, such student-borrowers – estimated to be in the vicinity of nine lakh -- would have to pay interest for the period beginning January 1, 2014.

Of the view that such students ``deserve some relief’’, the Minister said Rs. 2,600 crore would be set aside in the current financial year itself for the purpose. This will be transferred to Canara Bank which is the designated banker for the Central Scheme for Interest Subsidy (CSIS).

Dwelling at some length on the CSIS with respect to education loans, Mr. Chidambaram said the Government had introduced this in the 2009-10 Budget to take over the burden of interest for the duration of study and a little beyond from April 1, 2009.

Stating that the scheme had brought ``great cheer’’ to student-borrowers and their families, the Minister said he, however, noticed a ``sense of discrimination’’ among students who had borrowed before the cut-off date. Not only did such student-borrowers struggle to pay interest during the period of study, but they also had to service the loans afterwards.

Besides flagging the CSIS as a popular move, the Minister also cited the increased access to credit by minority communities as an achievement of the Government. In 10 years, the number of minorities having bank accounts had gone up from 14,15,000 in 121 districts with a minority concentration to 43,52,000.

While the volume of lending to minorities in these districts had gone up from Rs. 4,000 crore to Rs. 66,500 crore, loans to minority communities across the country stood at Rs. 211,451 at the end of 2013. Data with the Ministry of Minority Affairs shows that nearly 50 per cent of this has gone to the Muslim community which, the Sachar Committee found, had difficulties in accessing credit. Access to credit for Muslims was deemed as critical since a large proportion of the community is self-employed.

The Prime Minister’s 15-point programme for uplift of minorities – unveiled in 2006 to implement Sachar Committee recommendations – mandated that 15 per cent of all priority sector lending (PSL) should go to minorities. Ministry data claims that PSL to minorities has increased from 10.6 per cent in 2007-08 to 14.93 per cent in September 2013 with Muslims getting 47.01 per cent of the money loaned to minorities. However, the figure shows that the Muslim community still does not have access to loans commensurate with its population which makes for 72 per cent of India’s minorities.



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