Low-cost bank loan scheme for engg students on cards
From the Hindu Business line
MUMBAI, Aug 2
WANT to become an engineer but worried about raising finances? Take heart! Help is now at hand. Banks are considering a proposal to provide a special loan scheme for engineering students, which will enable them to raise resources at low rates — 5 to 6 per cent per annum.
In a landmark move to enhance the quality of education and upgrade facilities in engineering institutes to bring them on par with premier institutes like the IIT, the Government and the Directorate of Technical Education have jointly embarked on a project aimed at providing low-cost funds to engineering aspirants.
Tata Consultancy Services (TCS), the official consultants for the venture, has charted a roadmap for this purpose. TCS and the directorate recently made a presentation to chairmen of top public sector banks.
The study suggested a longer time-frame for repayment of engineering loans - ten years as compared to the seven years suggested in the generic scheme, lower non-cumulative interest rate of five to six per cent during the period of study (currently interest rates on such loans are at PLR i.e, 11-11.50 per cent).
The repayment amount may also vary with the earning potential of the individual and subsequently, the concessions could be removed.
One of the highlights of this loan scheme is that it is designed in such a way that the responsibility for repayment may rest on students. Hence the parents' inability to bear the loan does not become an impediment for eligible students.
The Union Government has already taken an initiative to upgrade a number of engineering colleges in the country to the levels of IITs. The objective is to increase the number of top class engineering graduates from about 3,000 to 30,000.
As a pilot project, Maharashtra has decided to upgrade three engineering colleges - VJTI, College of Engineering, Pune and Guru Gobindsinghji COE, Nanded, to the levels of IITs.
After the Finance Minister urged commercial banks to devise education loan schemes in his Budget, around 30 banks have come out with education loan schemes so far.