The public sector banks in the industry have decided to offer education loans to girls at concessional rates. These banks will give a discount of at least 50 basis points over the card rates for the loans extended to girls.

On February 4th, Indian Banks' Association asked its members to offer education loans to girls at discounted rates and extended the borrowing limit to Rs 10 lakh for studies in India and Rs 20 lakh for studying abroad.

Presently the education loan rates of the banks are ranging between 11% and 13%. The PSU banks are suppose to charge benchmark prime lending rate (PLR) for education loans up to Rs 4 lakh and loans between Rs 4 lakh and Rs 20 lakh have to be extended at a maximum rate of 1% above the PLR.

A finance ministry official said, "Some public-sector banks were already offering concessional schemes for education loans to girls. Now, there would be a dedicated scheme for all banks."

The finance ministry has taken the step to introduce a model educational loan scheme on the basis of observations by a parliamentary jury.

As per the RBI, education loan are classified under the priority sector advances. RBI rules state that 40% of loans should come under priority sectors including agriculture, small enterprises, housing and education.