All banks have been directed by the Government to implement interest subsidy scheme on education loans for unprivileged students who wish to pursue higher education.

The Government had been planning on implementing the interest rate subsidy since quite some time.

The Ministry of Human Resources and Development has generated a letter to the heads of all scheduled commercial banks wherein they have been asked to take appropriate measures in implementing the scheme so that the eligible students get a chance to avail higher education.

The scheme is made effective from academic year 2009-10, the HRD ministry said. A provision of Rs. 500 crore has been made for the scheme by the Government for the year 2010-11.

As per the scheme, student would be exempted from paying interest during the moratorium period.

Banks like Union Bank of India have come up with schemes benefitting students on a larger scale.