Education loans' guarantee limit to be increased to 10 lakhs: Report

New Delhi: The government of India is set to increase the limit of guarantee for education loans from Rs. 7.5 lakhs to Rs. 10 lakhs, according to Indian Express. The action can be interpreted as an effort to support the call for Public Sector Banks (PSBs) to enhance disbursements notwithstanding complaints of loan application rejection and delays in sanctioning loans.

Credit Guarantee Fund: What is it?

Currently, banks don't have to look for collaterals for up to Rs. 7.5 lakhs with education loans in the country backed up to Rs. 7.5 lakh by a credit guarantee fund.

The Ministry of Education is being consulted by the Department of Financial Services in the Finance Ministry for raising the guarantee ceiling by 33%, up to Rs. 10 lakh, according to the report by IE.

If this decision is made, credit guarantees for student loans will be consistent across the nation, comparable to those in Delhi and West Bengal, where the state governments provide supplementary insurance to raise the total guarantee to Rs 10 lakh.

If this action is taken, the credit guarantee for student loans across the nation will be uniform, similar to the credit guarantees for education loans in Delhi and West Bengal, where the state governments provide supplementary insurance to raise the overall guarantee to Rs 10 lakh.

In order to review loan disbursal targets, the Department of Financial Services scheduled a meeting with 12 government-owned banks for August 25. The report also states that a bank representative asked the administration to assure uniformity in guarantee for student loans at the aforementioned conference.