T K Rangarajan MP raises education loan issues in Parliament

Please read the text of the speech (26th July 2016) in Parliament of Shri T K Rangarjan, Member of Parliament, Rajya Sabha

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26.7.2016

T.K. Rangarajan M.P.,

Parliament Speech (26.7.2016)

Dear Sir,

At this zero hour I would like to bring to the attention of the house problem relating to educational loan.

This has two aspects.

One relating to sanction of the loan and the other relating to recovery of the loan.

The educational loan should not be equated with other loan. It is an investment on the youth of this country.

None of the Banks which show so much enthusiasm to create awareness about Home Loan and Car loan have come forward to create awareness about Educational loans. The Branch Managers shows no empathy for the students who approach them.

The Government announced 100% interest subsidy to eligible education loan borrowers. But in practice MHRD gave 20% interest subsidy shifting the 80% interest on the borrowers. And the Government not paying the interest subsidy, the loan is treated as NPA. The total mishandling of the subsidy has caused lot of inconvenience to the students.

Dear Sir, on the recovery side certain shameful thing are happening.

Now the State Bank of India has started selling their educational loans to Asset Reconstruction Companies. This resulted the Asset Reconstruction Companies approaching the borrowers like Shylock of Merchant of Venice and threatening the borrowers. In one case in Tamil Nadu the borrower of Educational Loan, not able to bear the harassment has committed suicide.

Sir in view of the importance of Educational Loan, which alone can help the Backward and SC/ST communities to go for higher education, I suggest that

1)                the Govt should issue the order to banks that they should not hand over these loans to Assets Reconstruction Companies.

2)                The special credit guarantee fund should be created to enable the Banks to claim their loan port folio

3)                The 100% interest subsidy promised by the Govt should be dispersed to Banks without any reduction

4)                The educational loan account in case of default should not be accounted under NPA.

Thank you Sir

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