Banks not reluctant to provide education loans

New Delhi, Dec 19 (UNI) Finance Minister P Chidambaram today denied that banks were reluctant to provide educational loans to students even though it conceded that there existed a gap between rural and urban areas in this regard.

While ruling out the need to set up any other fund for this purpose, Mr Chidambaram told the Rajya Sabha that education loans disbursed in rural and semi-urban areas had gone up from 20.45 per cent in 2003-04 to 31.98 per cent in 2005-06.

The total number of accounts for education loan stood at 51,337 in 2003-04 while in 2005-06, the figures touched 1,61,952, Mr Chidambaram said, quoting figures for 17 public sector banks.

Pointing out that education loans were covered under the priority sector, he said no specfic targets for public sector banks had been earmarked as ''they are doing well and the credit advanced by them is impressive''.

He also said guidelines on the education loan scheme emphasised that no deserving/meritorious student was denied opportunity to pursue education for want of financial support.

Mr Chidambaram said up to a loan of Rs four lakh, no security was required.

Replying to a supplementary, he said the gap between rural and urban areas with regard to disbursal of education loan was gradually declining with growing awareness among rural people about the scheme.

The minister said the government closely monitored the progress of disbursal of such loans and prompt redressal was undertaken in case of denial to a deserving student.

Mr Chidambaram said chairmen and managing directors of banks had been advised to ensure that there was no tardines in sanctioning loans to needy and meritorious students.

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