Gujarat has seen a steep decline in the education loan disbursal amounting to a huge 42% in the FY 2009-10. However, there has been a 12% rise in the number of bank accounts which shows more students are taking loans for higher studies. The dip has thus been attributed to the declining number of students taking loans for going abroad to pursue higher studies.

While the year 2008-09 saw loan disbursal amounting to Rs 581.62 crore; the number came down to Rs 332.37 crore in the successive year (2009-10) showing a decline by Rs249.25 crore in absolute terms.

"It seems the demand for education loans is coming more from students joining the not so-premium institutions," said P Nandakumaran, chief general manager, State Bank of India (SBI).

SBI's education loan book has seen the maximum decline amongst all banks in Gujarat.

MK Jain, SLBC convener and general manager, Dena Bank said, "The maximum amount given by banks as education loan is Rs20 lakh. The number of students applying for this maximum amount has gone down."