Minister of State (MOS) for Finance, Shri Namo Narain Meena said that education loans like other consumer loans are linked to the benchmark prime lending rates and have witnessed change in interest rates corresponding to the changes in BPLR.
Pointing to Model Education Loans Schemes of Indian Banks' Association, the minister said that banks have been extending education loans up to Rs. 4 lakhs at benchmark prime lending rates, with no collateral.
Education loans above Rs. 4 lakhs are disbursed at a rate, one percent above the benchmark prime lending rate.
The minister also said that the Government has encouraged public sector banks to provide loans at reasonable rates to meet the requirements of different sectors of economy.
The interest rates have been deregulated by the regulator and most of the lending takes place below prime lending rates.
Banks have been working around education loans, considering the economic slowdown and poor job market. Many banks have restructured education loans after receiving request for the same from students.
The union budget has also declared full interest subsidy on education loans taken from scheduled commercial banks.