Lok Sabha Question No. 1972 (UNSTARRED), answered on 2022-12-19
Subject: Education Loan for Higher Studies
Ministry: FINANCE
Asked by: Karti P. Chidambaram

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 1972

ANSWERED ON THE 19 th  DECEMBER, 2022/ 28 AGRAHAYANA 28, 1944 (SAKA)

## 'Education Loan for Higher Studies'

## 1972.  SHRI KARTI P. CHIDAMBARAM:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government intends to raise the guarantee limit for education loans for higher studies in India from Rs.7.5 lakh to Rs.10 lakh and if so, the details thereof;
- (b)  the  details  of  the  total  education  loans  disbursed  by  Public  Sector  Banks  (PSBs)  and Scheduled Commercial Banks (SCBs) in Financial Years (FY) 2019-20, 2020-21 and 2021-22, including provisional data for the current FY, bank-wise;
- (c)  the  details  of  the  total  Gross  Non-Performing  Assets  (NPAs)  of  PSBs  and  SCBs  on education loans during the said period, bank-wise;
- (d) whether it is a fact that PSBs are wary of sanctioning education loans due to an increase in defaults, if so, the reasons therefor; and
- (e) the steps taken by the Government to prevent delays and denials in sanction of education loans by banks and improve lending in the educational space?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KARAD)

- (a): The Department of Higher Education in the Ministry of Education is handling the Credit Guarantee  Fund  Scheme  for  Education  Loans  (CGFSEL).  As  per  this  Scheme,  the  credit guarantee  is  provided  for  education  loans  covered  under  Indian  Banks'  Association  (IBA) model  education  scheme  upto  Rs.  7.5  lakh  without  any  collateral  security  and  third  party guarantee.
- (b): As per the information available with Reserve Bank of India (RBI), total education loans disbursed by Scheduled Commercial Banks (SCBs) during the Financial Years (FYs) 2019-20, 2020-21 & 2021-22 are as below:

| FYs         | Total education loans disbursed by SCBs (in Rs crore)   |
|-------------|---------------------------------------------------------|
| 2019-20     | 18553.46                                                |
| 2020-21     | 18350.83                                                |
| 2021-22     | 17715.33                                                |
| Source: RBI | Source: RBI                                             |

In  terms  of  bank-wise classification,  the details of  the education  loans  disbursed  by  Public Sector Banks (PSBs), Private Sector Banks (PvSBs) and Small Finance Banks (SFBs) during the last three FYs since 2019-20 are as below:

| FYs         | Total education loans disbursed (in Rs crore)   | Total education loans disbursed (in Rs crore)   | Total education loans disbursed (in Rs crore)   |
|-------------|-------------------------------------------------|-------------------------------------------------|-------------------------------------------------|
|             | PSBs                                            | PvSBs                                           | SFBs                                            |
| 2019-20     | 16643.77                                        | 1761.88                                         | 147.81                                          |
| 2020-21     | 16984.98                                        | 1291.08                                         | 74.76                                           |
| 2021-22     | 15445.62                                        | 2234.14                                         | 35.57                                           |
| Source: RBI | Source: RBI                                     | Source: RBI                                     | Source: RBI                                     |

- (c):  As  per  the  information  available  with  RBI,  details  of  Gross  Non-Performing  Assets (GNPAs) of SCBs on education loans during 2019-20, 2020-21 & 2021-22 are as below:

| FYs         | Total GNPAs (in Rs crore)   | GNPAs to Gross Advances (%)   |
|-------------|-----------------------------|-------------------------------|
| 2019-20     | 8,96,082                    | 8.21                          |
| 2020-21     | 8,35,051                    | 7.33                          |
| 2021-22     | 7,42,397                    | 5.82                          |
| Source: RBI | Source: RBI                 | Source: RBI                   |

In terms of bank-wise classification, the details of total NPAs of PSBs, PvSBs and SFBs during the last three FYs since 2019-20 are as below:

| FYs         | Total Gross Non-Performing Assets (in Rs crore)   | Total Gross Non-Performing Assets (in Rs crore)   | Total Gross Non-Performing Assets (in Rs crore)   |
|-------------|---------------------------------------------------|---------------------------------------------------|---------------------------------------------------|
| FYs         | PSBs                                              | PvSBs                                             | SFBs                                              |
| 2019-20     | 6,78,317                                          | 2,05,848                                          | 1,709                                             |
| 2020-21     | 6,16,616                                          | 2,02,266                                          | 5,971                                             |
| 2021-22     | 5,40,958                                          | 1,80,742                                          | 6,911                                             |
| Source: RBI | Source: RBI                                       | Source: RBI                                       | Source: RBI                                       |

(d) & (e):  As per RBI guidelines, all education loans up to Rs 4 lakh are collateral free. Further, the  Government  has  launched  a  Credit  Guarantee  Fund  Scheme  for  Educational  Loan (CGFSEL) wherein collateral free loan is given up to Rs 7.5 lakh.

RBI has informed that the Model Education Loan Scheme, 2021 encompasses, inter-alia, broad guidelines regarding eligibility criteria, courses eligible for loan, quantum of finance, security and margin, rate of interest etc. and Banks are broadly guided by the above Scheme while sanctioning educational loans.

Further, Government has also launched an online portal viz; Vidya Lakshmi Portal (VLP) to ensure  hassle  free  education  loans  through  a  single  window  system  to  students.  Normally, sanction/rejection  will  be  communicated  within  15  days  of  receipt  of  duly  completed application with supporting documents in the bank. Rejection of loan application, if any, shall be done with the concurrence of the next higher authority and conveyed to the student stating reason for rejection. Further, the sanction as well as rejection (with reasons) should also be reported by the bank concerned on the VLP portal.

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