Independent expert committee to investigate education loan and interest subsidy scheme demanded in Lok Sabha

At the request of ELTF, Shri S R Vijayakumar, MP of Chennai Central took up the Education loan interest subsidy issue during 'Zero hour' in the Lok Sabha on 18th Dec 2014.  He demanded an independent expert committee to be set up to investigate into the administration of education loan and interest subsidy scheme.

The text of his speech as published in the Lok Sabha site:

http://164.100.47.132/newdebate/16/3/18122014/7To8pm.pdf

SHRI S.R. VIJAYA KUMAR (CHENNAI CENTRAL): Hon. Deputy-Speaker, Sir, I would like to bring to the notice of the august House an important matter. An independent expert Committee should be formed to investigate the administration

of educational loan interest subsidy. In response to my submission in the Lok Sabha on 30th July, 2014 under Rule 377, the hon. Finance Minister has written that the banks have been advised not to insist on payment of interest when the students are eligible for interest subsidy on educational loan. He has also mentioned that the banks have been asked to follow the guidelines. But in reality

we get a lot of complaints that the banks are forcing students to pay interest when they are eligible for interest subsidy. The poor students are forced to borrow money from all sources to repay the bank interest. The banks are creating only a small portion as eligible interest subsidy to the students. This defeats the very

purpose of the scheme to provide educational loan to poor students with comparable repayment. We get reports that the SBI classifies the educational loans as NPA even within four to five months after the moratorium and refer to Lok Adalat. This is causing mental agony to young students. There seems to be a lot of mess in administering interest subsidy on educational loans. I would like to

request the hon. Finance Minister to investigate the matter by forming a committee of independent expert 

7:52 AM

Education Loan Task Force (ELTF) launched at Chennai

India Vision online group and Action 2020 Team have been getting frequent requests from many meritorious poor students appealing for funds, as they could not get any bank loans for higher education. All along, partner groups of Action 2020 team have been supporting few of them, collecting funds from the members. On further examination, Action 2020 team found that all these students hailed from very poor families and the banks did not respect them properly for their demands.
Corporate ezine PR-e-Sense Jan 2010 issue carried the model scheme from IBA for education loans, along with the interview from RBI Deputy Governor. The core team of Action 2020 team decided to form an "Education Loan Task Force (ELTF)" to take up such cases where highly deserving poor students were harassed. In the Feb 2010 alone, the Task Force took up 5 genuine cases with the different banks and all the problems were resolved within two days.


This encouraged Core Team to make the ELTF formal and wanted to train volunteers of Action 2020 Team to spread the awareness across the State. The first ELTF meeting was held at Thakkar Bapa Vidayalaya, Chennai (Mahatma Gandhi stayed in this campus and he inaugurated this Vidyalaya in 1945).


Around 40 volunteers from the partner groups participated in this meeting. Senior level officials from State Bank of India, Indian Bank, Canara Bank and Inian Overseas Bank participated in this ELTF Meeting. Many eminent personalities of the City like Mr Desikan (Founder, Consumers Association of India), Mr Maalan (Well known journalist and Editor), Mr Rajasekar (Mg. Trustee, National Agro Foundation), Dr Santhosh Babu IAS (Mg. Director, ELCOT and Director, E-Governance of TN Govt.) and many senior journalists participated. Com. T K Rangarajan MP sent his representative to observe the proceedings and to brief him back.


The interaction between the volunteers and the Banks were really fruitful in a cordial atmosphere and enable to understand each others problems.

Some of the problems faced by the students from banks:

• Students are asked to go to pillar to post by the Branch officials and they are not given proper response;
• Demanding of collateral security / guarantee even for smaller amount;
• Insisting on payment of interest every month, before completing the studies;
• Branch officials not aware of education loan procedures and giving scant respect to the students with poor background, etc.

Some of the problems faced by the bankers:

• Students from unaunthorised colleges and unauthorised courses demand education loan;
• Students demand loans for courses, which can not provide employment (Eg. teachers training courses);
• Since banks are lending funds, some of the colleges inflate their estimates to get more money, which will ultimately make the students as heavy borrowers. Even many colleges send the estimates as Rs.3,99,500/- to avoid offering collateral security. Banks are unable to confirm the genuiness of the proposals.;
• Some of the students, who availed edu loan from banks shift their places without informing the bank and do not even repay the loans. this causes lot of difficulties for the banks and the officials;
• The colleges do not give estimates on admission. Without estimates, banks cannot process the loans.

There were suggestions from the bankers whether the University certificates of the students could be marked with 'Red strip' to indicate the Edu loan. This would caution the employers to remit the dues to the banks concerned.


Dr Santhosh Babu IAS, Director E Governance, Tamilnadu Government offered to provide a software interfacing between the banks, colleges and the district collectors. If this is implemented, this will be the first of its kind in India and would remain as model for other states. Shiva and Ravi, coordinators of Action 2020 Team and ELTF will coordinate this software project.
The Action 2020 finalised the template for supporting the students. It was also resolved to help minimum of 100 highly deserving, but poor students to avail education loans from banks. All such students will be allotted with a mentor who would guide him through the studies and also create awareness about the bank rules, prompt repayment etc.


If any information is needed on ELTF, send a mail to action2020eltf@gmail.com

2:59 AM