HRD Minister Kapil Sibal today hit out at the Planning Commission for rejecting a proposal to set up an education finance corporation to refinance student education loans, saying the move was against the interest of the students.
"The HRD Ministry has been knocking at the doors of Planning Commission saying please set up the corporation... and my friend Montek has been little more conservative than me on these issues. I have to say this because they rejected idea of the corporation," the Minister said.
"Unless the loans are guaranteed by government, no financial institution is going to give loans," he said at a function here with Planning Commission deputy chairman Montek Singh Ahluwalia in attendance.
Sibal said the present loan structure of the government was not conducive for either students taking loan or banks offering loans. "We need to actually liberalise the whole structure".
In this context, he suggested that financial institutes should have a flexible lending policy when extending loans for setting up educational institutes.
"I believe the banks must be asked to give long term loan to educational institution paid over period of 20 to 25 years. To set-up an education institution nobody is going to borrow at 12% or 16% and set-up up institution where you have to return the loan over period of 7 years," he said.
Member Planning Commission Narendra Jadav, on the occasion, said a working group on education has recommended allocation of Rs 4,13,000 crore for the 12th Plan Period, the allocation of which will be finalised next week.