PSB education loans to jump 50% this year

[Kalyan]

PSB education loans to jump 50% this year

Public sector banks (PSBs) are set to report a 50% jump in education loans in 2008-09, highlighting the government's push to take higher education to the masses.

Education loans come under the priority sector lending category, as prescribed by the government and the Reserve Bank of India, which ensures that all banks allocate at least 40% of their total loans to sectors such as education, housing and small industries.

The education loan portfolio of PSBs is slated to touch Rs 30,000 crore by the end of 2008-09 against Rs 19,816 crore in 2007-08, a finance ministry official told ET.

"This is for the first time that it has crossed the Rs 25,000-crore mark. This has been possible because of the aggressive disbursal plans of PSBs," said the official who asked not to be named.

Total disbursed education loans of PSBs were at Rs 26,303.62 crore as on December 31, 2008, as per details available with the Indian Banks' Association (IBA).

Education loans have grown 600% since March 2004 when the figure stood at Rs 4,550 crore.

The ratio of education loans as a percentage of banks' total advances has also improved over the years. Education loans consisted of 0.64% of the total advances of PSBs in 2004. It almost doubled to about 1.25% as on December 31, 2008. Most of the education loans have been taken for higher studies.

IBA has also instructed member banks to give a rebate of at least half percentage point on interest payable towards education loans to the girl child.

source : economic times