Lok Sabha Question No. 1157 (UNSTARRED), answered on 2025-07-28
Subject: Guidelines for Disbursement of Education Loans
Ministry: FINANCE
Asked by: Smt. Rachna Banerjee

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

## LOK SABHA UNSTARRED QUESTION NO. 1157

ANSWERED ON MONDAY, 28 th  JULY, 2025/ 6 SRAVANA 1947 (SAKA)

## GUIDELINES FOR DISBURSEMENT OF EDUCATION LOANS

## 1157 SMT. RACHNA BANERJEE

Will the Minister of FINANCE be pleased to state:

- (a) the details of the guidelines for disbursement of education loans;
- (b) whether the Government has made it compulsory to produce/produce collateral security for education loans;
- (c) the number of education loans rejected by public sector banks during the last five years; and

(d) the steps taken by the Government to facilitate students to get education loans?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SH. PANKAJ CHAUDHARY)

(a) to (b) All Scheduled Commercial Banks (SCBs) have been advised by Reserve Bank of India to adopt Model Education Loan Scheme, formulated by Indian Banks' Association (IBA). The main features of the scheme are as under:

-  The scheme provides need-based education loan.
-  No collateral security or third-party guarantee is required for loans amount up to ₹ 7.50 lakhs, provided they are eligible for Central Sector Interest Subsidy Scheme (CSIS)/ Credit Guarantee Fund Scheme for Education loan (CGFSEL)
-  No Margin for loans up to ₹ 4 lakhs.
-  Moratorium period is allowed upto study period plus one year in all cases.
-  Repayment period (after moratorium) is available upto 15 years for all loans.

Public Sector Banks (PSBs) also provide collateral free loans beyond ₹ 7.50 lakhs, on case to case basis as per their Board approved policies.

(c) As  informed  by  IBA,  the  data  on  number  of  education  loans  rejected  by  PSBs  is  not maintained centrally. However, as per the IBA Model Education Loan Scheme, 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,  as  per  the  information  furnished  by  PSBs,  it  is  observed  that  in  terms  of  amount disbursed, the Compound Annual Growth Rate over a period of five years i.e. from FY 202021 to 2024-25 is 20%.

(d) PM Vidyalaxmi scheme has been launched on 06.11.2024, which enables loans through banks to meritorious students so that financial constraints do not prevent any youth of India from pursuing quality higher education. The scheme facilitates and enables education loans to meritorious students who get admission in the top 860 Quality Higher Educational Institutions (QHEIs) in the country and enables meritorious students of these QHEIs to take collateral free, guarantor  free  education  loans  through  a  simple,  transparent,  student-friendly  and  entirely digital application process. The loan shall cover full amount of tuition fees and other specified expenses related to the course, for study in India only.

The scheme also provides for 3% interest subvention on loans up to ₹ 10 lakh to a maximum of one lakh needy students in a year, where annual family income is less than ₹ 8 lakhs. This is in addition to the full interest subvention already offered to students with up to ₹ 4.5 lakhs annual family income under CSIS.

Further, loan amounts up to ₹ 7.5 lakhs will also be provided a 75% credit guarantee by the Government of India, through NCGTC.

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