New Delhi: The Reserve Bank of India (RBI) has decided to reduce the risk weightage on education loans from 125 percent to 75 percent. Though the interest rates on education loans won't fall immediately, this step will definitely make it easier for the students to get education loans for their chosen course.

The reduction in risk weightage will increase the funds available with the banks for lending and therefore they will be able to give a larger number of education loans. Education loan is one of the better performing lending segments and have low non-performing assets, as banks ask for collateral or co-applicant in case the loan amount exceeds Rs. 4 lakhs. Banks in India, provide education loans up to Rs. 7.5 lakhs for course in India and up to 15 lakhs for studies abroad.  

Sensing the importance of talented manpower as an important means to sustain the high economic growth, Government of India has off late taken many steps to promote the off-take of education loans in India. A Higher Education Loan Guarantee Authority (HELGA) is proposed by the Government of India (GOI), to help needy students get an education loan without hassles and it will also take care of the interest rate payments during the 'moratorium period' of education loan taken by the students.

A special scheme, which will provide education loans at a subsidized interest rate of 4 percent was also started by the Ministry of Human Resource Development had specially catering to the students belonging to poor sections of the society. This reduction  in education loan risk weightage by RBI is also an important step in making education loan accessible to a larger section of students.