With higher literacy levels, southern states have become the front runner in giving out educational loans in the country as compared to their northern and eastern counterparts.
In fact, of the targeted 33.8 lakh student loan accounts in the country this fiscal, a third will be opened by Tamil Nadu while the most populous states of Bihar and Uttar Pradesh will open less than 10 per cent of such accounts.
Latest data with the finance ministry reveals that Tamil Nadu will set up the largest number of student loan accounts in the country this fiscal at 10.85 lakh and will disburse Rs 16,851 crore of funds under the head, which is nearly 24 per cent of the targeted of Rs 70,571 crore.
In comparison, Bihar will open 1.20 lakh such accounts and disburse Rs 2,840 crore for students, while Uttar Pradesh plans to open 2.15 lakh such accounts and give out Rs 5,429 crore as student loans.
Meanwhile, West Bengal, which has a higher literacy rate than the national average will open an even lesser number of accounts at 89,736 and disburse just Rs 1,982.89 crore.
Education loans are given by banks through the Model Education Loan scheme to help meritorious students pursue higher studies in India and abroad. Education loans is also a part of the priority sector lending mandated by the Reserve Bank of India. Banks can provide up to Rs 10 lakh to students studying in India and a maximum of Rs 20 lakh to those studying abroad under the priority sector lending.
But it is not just Tamil Nadu, on an average, southern states including Andhra Pradesh, Kerala, Karnataka are set to give out more than half of the education loans this fiscal, followed by eastern states like Bihar, Jharkhand and West Bengal while Central Indian states such as Uttar Pradesh, Madhya Pradesh and Chhattisgarh come third.
The data was reviewed by finance minister P Chidambaram on Tuesday during his meeting with chairmen of state owned banks. Expressing satisfaction over the progress of the education loan scheme, Chidambaram had said that bankers have promised to meet targets for new account opening and disbursements