Banks may advance edu loans at lower rates; to waive off collateral clause
By Neelima Shankar
Oct 19, 2012
Print    Email    RSS   

Banks have hinted at a possible decrease in education loans interest rates in near future. In addition to this, they may also sanction these loans to students who cannot provide collateral or a guarantor to avail education loans.

Presently, banks offer education loans till Rs. 4 lakh with no collateral or guarantor clause. Loans above this amount and up to Rs. 7.5 lakh are advanced to those who can provide an eligible guarantor, but no collateral is needed in these cases. On the other hand, private sector banks are reluctant to provide education loans at all as recovery is difficult in case of defaults in education loans.

For these reasons, education loans are considered as risky loans and thus these loans usually have high interest rates as compared to other loans like auto loans.

In order to lower the riskiness of these loans and to persuade banks to advance more education loans, even without collateral or guarantor, Finance Minister P. Chidambaram has planned to establish a Credit Guarantee Fund before the end of this year. The fund is expected to help public and private sector banks to provide education loans up to Rs. 10, 000 crore up to the amounts of Rs. 7.5 lakh.

Finance Ministry had announced to set up such a fund in the previous budget, to allow improved flow of credit to worthy students.

(Comments Posted : 0) Post Your Comments
Show All Comments
 Select a product:

 Select a product:

Carnival of Indian Personal Finance Blogs #2
Carnival of Indian Personal Finance Blogs #4
Claim tax deduction on education loan
A chronicle of excesses by loan recovery...
Complete guide to education loans in India

Where is Dissertation Help India whose email is...
ROPAR: CaℒL Giℛℒ In Kurali 09855660911...
Why Pitampura Tutors (Ph:- 9911742311) & Private...

Banks to look forward to hire students from IIT/IIM Feb 18, 2015
Union Bank of India hiring for the post of specialist officers Feb 16, 2015
Canara bank launched scholarship Scheme Feb 13, 2015
AXIS bank started ‘My idea of progress’ Campaign Feb 12, 2015
RBI inviting applications for the guard post Feb 11, 2015
News Archive