The Bharatiya Janata Party (BJP) plans to edge the central government out over the issue of education loan as the nationalised banks do not show much interest in its disbursal, said a party leader Friday.
Banks also do not pass on the interest subsidy to eligible poor borrowers and shame the students by pasting their pictures on the branch notice boards when they default on dues.
"The Lok Sabha elections are round-the-corner and we have decided to take the issue against the UPA (United Progressive Alliance) government and create awareness among the people and majorly among the youth," BJP's member of parliament (MP) from Maharashtra Hansraj Gangaram Ahir told IANS.
At the state level also, BJP office-bearers are planning to raise the problems faced by students in getting education loan. "On one hand the government says it cares for all the sections of the society, but no provision is made for the funds for the educational loan scheme being implemented by the government," Ahir said.
In a letter to Prime Minister Manmohan Singh Sep 4, Ahir highlighted students' problems in getting education loans and interest subsidy, among others. The human resource development (HRD) ministry was looking into the issue of non-payment of interest subsidy to eligible borrowers and other issues related to the loan, he said.
The education loan is one of the pet schemes of union finance minister P.Chidambaram who boasts of it at public meetings. The scanty provision of funds has deprived lakhs of students and youth from pursuing their education.
"The total education loan portfolio for the banking sector as on March 31, 2013, is around Rs.53,000 crore in around 25 lakh accounts," convener of Education Loan Task Force (ELTF), K. Srinivasan said.
ELTF guides students on rules and regulations governing the education loans offered by nationalised banks. Srinivasan said under the interest subsidy scheme, the centre would reimburse the banks the interest due on the loan amount till the end of one year from the date of completion of the course or six months from the date on which the student lands a job after his course -- whichever is earlier.
The centre would reimburse the interest to those students whose parental income is less than Rs.450,000 per annum, and on loans which are available only for professional and technical courses and not for arts/science and students of diploma course, Srinivasan said.
Citing union budget documents, he said during 2011-12, Rs.697 crore was allotted for the loan's interest subsidy. Between 2012-13 and 2013-14, Rs.800 crore and Rs.1,100 crore have been allocated.
"Based on the complaints received by ELTF, many students have not been getting interest subsidy from many banks. There are bank managers who even fob off the borrowers denying any such interest subsidy scheme," Srinivasan remarked.
He said Canara Bank is the nodal agency for setting the bank's claims under the interest subsidy scheme for a fee and it would claim the amount from the HRD ministry.
"I understand the Rs.1,100 crore allocation for this fiscal has already been exhausted," he added. Under the Indian Bank's Association (IBA) guideline loan repayment could be done over 10 to 15 year period, Srinivasan said. "But banks force the students to pay within three/five years.
With the poor economic situation and the lack of employment opportunities, the students are not able to pay huge monthly dues. The banks then classify the accounts as non-performing and give a negative public image about this portfolio," he said.
"We appreciate the interest subsidy scheme, but the way in which the interest subsidy is managed needs to be thoroughly audited by Comptroller and Auditor General (CAG) or by the Reserve Bank of India (RBI)," the ELTF convener said.