Millennium Post

EC halts education loan interest-waiver scheme

The Indian Election Commission has asked the government not to implement a Rs 2,600 crore scheme to provide a moratorium on interest payments on the education loans of 9 lakh students until the elections are completed.

The interest-waiver scheme can be implemented by the Finance Ministry after the election process, sources said.
It also asked the ministry to ensure that no publicity of the scheme is made during the election period, sources added.
Voting in the Lok Sabha elections is scheduled to end on 12 May and counting will be taken up on 16 May.
In the 17 February interim Budget, Finance Minister P Chidambaram announced the waiver of interest on education loans taken before March 2009 that were outstanding at the end of December 2013.

‘Since interest concession is being given to borrowers (who have availed of loans) after 1 April, 2009, what we are saying is if there is any outstanding interest on the loan you took as on 31 December, 2013, I am willing to take over the interest burden,’ the Finance Minister had said.
‘Our calculations show Rs 2,600 crore is the outstanding interest as on 31 December, 2013. We are wiping out that burden from the shoulders of families, we are taking over the burden. This is huge relief to 9 lakh families,’ he had said. However, borrowers are required to pay regular interest after 1 January, 2014.

As per the announcement, Rs 2,600 crore was transferred to the designated Central Scheme for Interest Subsidy (CSIS) banker Canara Bank.
At the end of December 2013, public sector banks had 25,70,254 student loan accounts and the amount outstanding was Rs 57,700 crore. In the 2009-10 Budget, the government had announced the Central Scheme for Interest Subsidy in respect of education loans disbursed after 1 April 2009, under which the government took over the burden of interest for the duration of the period of study and a little beyond.
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