PSBs red flag technical glitches in implementing PM Vidyalaxmi scheme

Amid a slow uptake of the PM Vidyalaxmi scheme — a central government initiative aimed at providing financial support to meritorious students — public sector banks (PSBs) have raised several concerns regarding its implementation.

 

This comes even as the finance ministry told PSBs to launch awareness campaigns to improve outreach.

 

Among the key issues highlighted are persistent technical glitches, including repeated login failures due to server-level errors and frequent auto logouts from the portal.

 

Furthermore, the migration of old leads to the new portal has not been completed, making it difficult for banks to track and process previous applications, said a senior government official.

“Banks are also facing limitations in data access, as there is no facility for detailed or complete data/MIS (Management Information System) downloads,” said the source. 

 

The scheme was launched in November last year after the announcement in the FY25 Budget to support meritorious students through enhanced financial assistance for higher education.

 

As on April 1, 2025, of the total 2,963 applications, 76 per cent are pending, 20 per cent sanctioned and 4 per cent rejected so far since its launch by the PSBs. 

 

The PM Vidyalaxmi offers collateral-free and guarantor-free education loans, with government-backed credit guarantees of up to 75 per cent for loans up to ₹7.5 lakh.

 

Additionally, students from families with an annual income of up to ₹8 lakh are eligible for a 3 per cent interest subvention on loans up to ₹10 lakh. This is over and above the full interest subvention already provided to students from families earning up to ₹4.5 lakh annually under the PM-USP Central Sector Interest Subsidy (PM-USP CSIS) scheme. 

 

The source added that the students are encountering challenges as well, such as the absence of options to modify or withdraw their loan applications from a particular bank.

 

“Furthermore, the portal does not provide branch-level status updates, leaving students uninformed about the progress of their applications. An additional concern is the closure of some schools or colleges. In such cases, details like the Unified District Information System for Education (UDISE) code are missing from the database. This is further complicating the verification and processing of applications,” added the source. 

 

However, the source said to enhance awareness about the new education loan portal, the finance ministry has told the PSBs to organise education loan kiosks through the resident branches of the 860 qualified higher educational institutions (QHEIs). 

 

“The finance ministry also told the PSBs to share details of the designated nodal officer with the respective higher educational institutions (HEIs) and Canara Bank so that these details could be displayed both on the portal and within the institutions for easy access by students,” added the source. 

 

The source further noted that the finance ministry has told PSBs that efforts should be made to reduce the turnaround time (TAT) for processing education loan applications to 3–5 days. This updated timeline should be clearly reflected on the portal. 

 

“Banks have also been advised that instead of rejecting applications for minor errors or missing documents, students should be permitted to modify or rectify their applications and submit additional documents, if needed. Also, students should be allowed to submit certificates issued by the college, university, or institution where they have secured admission, without being required to obtain fresh validation specifically for submission to banks. This will ease the documentation burden and make the process more student-centric,” said the source.