Kerala: Relief for student loanees

Thiruvananthapuram: The state government announced an Education Loan Support Scheme that would benefit those who had availed up to 9 lakhs as education loan. Chief minister Mr. Pinarayi Vijayan, who announced the '900 crore scheme in the Assembly on Thursday, said that social issues caused by mounting education loan defaults prompted the government to launch the scheme. It would have retrospective effect from April 1, 2016 and would be available only to those having an annual family income of up to Rs 6 lakh as on that date.

As per the scheme, the government would bear 90 percent of the amount repayable during first year, 75 percent in the second year, 50 percent in the third year and 25 percent in the fourth year for education loans up to Rs 9 lakh for which repayment commenced before April 1, 2016 and had not become non-performing assets (NPAs). For loans up to Rs 4 lakh that became NPAs on or before March 31, 2016, the government would give financial assistance of 60 percent in cases where the loanee settled 40 percent of the amount and the bank waived the
interest.

For loans between Rs 4 lakh and '9 lakh that became NPAs, the government would bear 50 percent of the principal amount, subject to a maximum of Rs 2.4 lakh, provided the banks offered a special package to close the loan. The bank may either prepare a repayment schedule for the balance amount or the loanee should repay it in full. In case of students who died or suffered physical or mental disabilities during the term of the loan, the government would bear the entire principal amount in case the bank waived the interest. The scheme would be available only during four years after the repayment holiday.

The chief minister said that about '900 crore would be required for the scheme. The financial requirement for the first year would be in the range of Rs 500 crore to Rs 600 crore. He also said that the State Level Bankers Committee said that as per the Reserve Bank of India norms, loans above Rs. 4 lakhs that become NPAs could not be restructured and hence loans in the range of Rs 4 lakh to Rs 9 lakh could not be closed under the one time settlement schemes. After the government launched the education loan support scheme, discussions would be held with banks for special packages for such loans, he added.