Finance minister P Chidambaram in his 2014-15 interim budget speech on Monday announced a moratorium on interest payments for education loans taken before March 31, 2009.
The government will take over the liability and provide R2,600 crore for outstanding interest as on December 31, 2013, however, the borrower will have to pay interest for the period after January 1, 2014.
“It is estimated that nearly 9 lakh student borrowers will benefit to the tune of approximately R2,600 crore. I intend to provide the funds in the current financial year itself,” said Chidambaram.
At the end of December 2013, public sector banks have 25,70,254 student loan accounts and the amount outstanding was R57,700 crore.
In the Union Budget 2009-10, former finance minister Pranab Mukherjee had introduced the Central Scheme for Interest Subsidy (CSIS) with respect to education loans disbursed after April 1, 2009, under which the government paid the interest on behalf of the student in the period of their study and a little beyond.
“The scheme had brought great cheer to student-borrowers and their families. However, I have noticed a sense of discrimination among students who had borrowed before March 31, 2009,” added Chidambaram.