Modifications needed in education loans

EDUCATION LOANS which are being offered to students by PSU banks under the RBI rules need to undergo immediate modification by the government of India. The present scheme that is being followed by these banks is a trick, which they are executing by maintaining RBI rules and using it for making profits.

The PSU banks charge a student and his / her parents by terming education loans as ‘Term Loan for Education’, and attract a higher rate of interest (10-12 per cent) in the category of premium borrowing rates, as compared to that of term loans rendered to individuals for commercial trading or business purposes. Moreover, the tenure of such education loans is, maximum, 7.5 years since the date of sanction of the loan. This is outright cheating by the PSU banks, which portray such loans as education loans to students for higher studies under the RBI’s rules and regulations.

I think it is not the brain child of the government, nor that of the RBI; it is the brain child of all the General Managers, AGMs, Sr Managers, and Credit Managers of all PSU banks, who, for their own self-vested interests – to prove to the CEO of the banks that they are efficient managers – put a tremendous pressure on students as well as their parents.

The same profit centres are used for rendering advertisements for IPL matches, etc. besides presenting the balance sheet and profit and loss accounts – which are very attractive – with high profit margins for PSU banks and demanding 300 times higher salaries for the above mentioned group of people.

Now let us see how the government is looking after the students through the University Grant Commission (UGC) programmes, since 1997, till date. It is doing an excellent job, and we, the citizens of India, have no complaints against it.

I did my engineering from the Institute of Technology (IT), Banaras Hindu University, in 1972. My fees were Rs. 425 per annum, payable in four instalments. Even today, it is not much. My son passed his BA. LLB. (Hons) from Calcutta University under the UGC last year, and his fees were only Rs. 25 per month. Can anybody with even a little common sense think that it is possible to complete one’s entire education in such a small amount of fees? I am sure the answer will be no. Then who pays the remainder fees of the students, thus helping them to study professional courses and get masters degrees? It is the government that helps them through the UGC, by a non-returnable finance, and that too, without interest.

Now that the Congress’ UPA government has been voted to power, our Prime Minister, Finance Minister, and Education Minister, must put a stop to this nonsense with immediate effect and also request the PSU banks to return all the interest they have collected in the last Lok Sabha period, i.e., from 2004, till date, to the students and their parents, and also handover mortgage and LIC investment documents to them, so that they can take fresh loans by mortgaging such documents to clear off the entire loan at the maximum rate of 4-5 per cent interest.

The people of India must know this, and all educated and literate parents and students must bring this to the notice of the government, so that it can provide for at least 10-20 years loan periods for education loans at 4-5 per cent interest rates.

Source: http://www.merinews.com

Date: 24th March, 2010

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