Most commercial banks, including the SBI and PNB have decided not to increase interest rates on education loans. The decision covers both existing and new loans.
The students opting for education loan to support their higher studies sure have a cause to celebrate.
The banks have been instructed by the Finance Ministry not to tamper the lending rates of the priority sector. The ministry said "the interest rates of the priority sector, particularly education, agriculture and housing should remain untouched up to a loan amount of Rs 30 lakh. Since the public sector banks are the major players in providing an education loan, private lenders would not have a role to play in this regard."
A senior official of the finance ministry stated, "Almost all the public sector banks have agreed to our suggestion of not raising interest rates for most of the sectors coming under priority sector lending including education loans."
Earlier in August Finance Minister, Mr. P.Chidambaram discussed this matter with the chief executives of the state owned banks. Most of the banks agreed on keeping the lending rate of education loan constant. However a few of them had objected. A bank official said, "One or two banks had some objections which are also likely to be sorted out soon."
Banks have raised the Prime Lending rate by 75 to 100 basis points. SBI, PNB, Allahabad Bank and Bank of Baroda are some of the banks that have increased their PLR and thereafter revised the sector specific loan rates. However these banks have not revised the lending rates of education loan. Infact, some of them have also decided to keep auto loans untouched. Since the new home loans comes under the priority sector, the interest rates have not been changed for an amount up to Rs 30 lakhs.