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Union Minister of State for Finance Pankaj Chaudhary, in a written reply to the Lok Sabha on Monday, said that in terms of outstanding education loans, the Gross Non-Performing Assets (NPA) of Public Sector Banks (PSBs) reduced from 7% in FY 2020-21 to 2% in FY 2024-25, thereby showing the significant improvement in asset quality of education loans over the years.
"Credit-related matters of regulated entities (REs) are largely deregulated and the same are governed by the Board approved loan policies of the REs framed under the ambit of relevant regulatory and statutory requirements and terms and conditions of the loan agreement between the borrower and the RE. RBI has advised the banks to put in place a Board approved loan policy and they shall take credit related decisions as per the said policy, subject to the guiding principles of regulations," Chaudhary said in his reply. He stated that the Reserve Bank of India (RB)I has taken several initiatives to improve recovery and to resolve incipient /established stress in banks including issuance of the Prudential Framework for Resolution of Stressed Assets under RBI (Commercial Banks - Resolution of Stressed Assets) Directions, 2025 which is a principle-based framework and provides for early recognition and resolution of default in a time bound manner. All Scheduled Commercial Banks (SCBs) have been advised by the Reserve Bank of India (RBI) to adopt Model Education Loan Scheme (MELS). The scheme inter alia provides need-based education loan and no collateral security or third-party guarantee is required for loans amount up to Rs 7.50 lakhs, provided they are eligible for Central Sector Interest Subsidy Scheme (CSIS)/ Credit Guarantee Fund Scheme for Education Loan (CGFSEL). Public Sector Banks (PSBs) also provide collateral free loans beyond Rs 7.50 lakhs, on a case-by-case basis as per their Board-approved policies, the MoS said in his reply. He also highlighted the PM Vidyalaxmi scheme saying the scheme is enabling 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 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 application process," he told. (ANI)
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