'Education loan interest subsidy only two percent'

Even as the government is willing to provide 100 percent interest subsidy for eligible education loan borrowers, some public sector banks are unwilling to pass on the benefit, an official said

K. Srinivasan, convenor of Education Loan Task Force (ELTF) told IANS: "It is a case of government proposes and the bank disposes."

Citing the plight of a borrower of Bank of India, he said: "The chief manager of the Kodungaiyur branch here has informed an education loan borrower clearly that the interest subsidy is only at two percent and the total remission of interest is not possible."

He also shared with IANS a copy of the letter written by the bank official to the borrower.

When contacted for the bank's reaction over phone, an official told IANS that the matter has been escalated to higher officials.

According to Srinivasan, a borrower, if he fulfils the criteria, is eligible for 100 percent interest subsidy.

Under the interest subsidy scheme, the centre would reimburse the bank the interest due on the loan amount till the end of one year from the date of completion of the course, or six months from the date on which the student lands a job after his course, whichever is earlier.

"The Centre would reimburse the interest to those students whose parental income is less than Rs.450,000 per annum, and on loans which are available only for professional and technical courses and not for arts/science, and students of diploma courses," Srinivasan said.

Citing the minutes of a meeting of the working group on education loan scheme held in January in Bangalore, Srinivasan said: "The government and the bank top management know that the branch managers are not aware of the scheme."

The meeting was attended by officials from the union Ministry of Human Resource Development and several public sector banks.

"Interest subsidy amount is credited to the accounts of SC (scheduled class) candidates in full and only a partial amount is credited to the accounts of ST (scheduled tribe) and other General category candidates. This partial credit of interest subsidy has led to complaints to Ministry of HRD, Indian Banks' Association, the concerned Bank, Nodal Bank and Education Loan Task Force," the minutes note.