The central government too approved the decision of public sector banks not to allot education loans for students under management quota. The union finance ministry has approved the model education loan project prepared by the Indian Banks Association (IBA). Due to this the demand of the state to make some amendments in the project is also nullified.
The delegation by the Kerala CM who visited PM recently demanded the same. Union minister Namonarayanan Meena in a letter sent to KN Balagopalan MP clearly stated that the project would be implemented in toto.
The decision will mostly affect states having a number of engineering and medical self-financing colleges.
Earlier the IBA has asked all the banks not to give education loan for students admitted under management quota. This decision has been made by Indian Banks Association (IBA) while preparing the revised scheme for education loans, which will be introduced from the next financial year onwards. The decision was made in the wake of the increase in instances of non-payment of educational loans by students.
IBA has further announced that the banks have the liberty to decide on the terms and conditions on the matter of education loans. The IBA has observed that loans given to students who are admitted under the management quota has reasonable chances of becoming bad since the employment potential of such students is much low. Currently the banks have reported a non-payment of Rs 1000 crore. The modified scheme will be introduced from the next financial year onwards after including the suggestions from the financial ministry.
With this decision, it is somewhat clear that students who gain admission via management quota and in self financial colleges will not get loans in future.