Study loan

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Study Loan.
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• Easier Study Loans, At Higher Rate

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• The Centre is giving finishing touches to a
  proposal for granting higher study loan of up to
  Rs 7.5 lakh without third-party guarantors from
  next year, two officials have said. However, the
  loans may carry a higher interest rate.
• If the plan to remove the need for a guarantor is
  implemented, it is expected to go a long way in
  reducing a hassle associated with student loans.
  Banks seek a third-party guarantee to mitigate
  the lenders' risk. In case of default by the
  borrower, banks can initiate legal action and
  seek recovery of the loan from the guarantor.
• The department of financial services, a wing of
  the Union finance ministry, is likely to issue a
  notification soon which will be applicable to
  banks participating in the proposed Credit
  Guarantee Fund Scheme for Education Loan, the two
  officials said.

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• Over 60 scheduled commercial banks, including
  public sector banks, are expected to participate
  in the credit guarantee scheme.
• The interest rate on such study loan could be
  higher than that mooted in the current model
  education loan scheme of the Indian Bank
  Association (IBA).
• Banks are currently charging interest at the
  prime lending rate (10 to 11 per cent) for loans
  up to Rs 4 lakh. The rate is 1 per cent above the
  PLR for loans between Rs 4 lakh and Rs 7.5 lakh.
• Under the credit guarantee scheme, the banks may
  be allowed to charge 2 per cent above the PLR for
  loans between Rs 4 lakh and Rs 7.5 lakh. The
  repayment period (usually 20 years) will start
  one year after the course is over.

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• Economist Bhalchandra Mungekar, who had mooted
  the proposal for a credit guarantee authority in
  2008 when he was a member of the erstwhile
  Planning Commission, welcomed the credit
  guarantee scheme but expressed displeasure over
  higher interest rate.
• "Waiving the third-party guarantee is welcome.
  But the scheme allows higher interest rate, which
  would affect the weaker sections and Scheduled
  Caste and Scheduled Tribe students," Mungekar
  said.
• He said the plan when the UPA was in power was to
  make the repayment period (around 20 years) start
  two years after the completion of the course.
• "The present proposal looks like the government
  is extending help with one hand and taking away
  with the other hand," Mungekar said.

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• Mohan V. Tank sale, the chief executive of the
  IBA, said thousands of students were facing
  difficulty in getting third-party guarantee for
  loans. A waiver of such a requirement will
  benefit such students, he said.
• "About 4 lakh to 5 lakh students take education
  loans every year. The proposal to waive third
  party guarantee will bring relief to a major
  chunk of students," Tanksale said.
• The proposed credit guarantee scheme will give
  surety to the education loan sanctioned by the
  participating banks. Each bank will contribute
  0.5 per cent of the amount for which it seeks
  guarantee every year.
• The scheme may provide guarantee coverage for
  education loans totalling Rs 75,000 crore in five
  years.
• The government is planning to set up a corpus of
  Rs 3,500 crore under the scheme with Rs 500 crore
  in the initial year.

• Source http//www.telegraphindia.com/1150917/jsp
  /nation/story_43111.jsp.VgI0ttKqqko

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