Giving a major relief to nearly 9 lakh students, Finance Ministry, Government of India in its interim budget, 2014 has decided to pay the interest amount on all education loans taken up to 31 March 2009 but remained unpaid by 31 December 2013.
The Union Finance Minister, P. Chidambaram making the announcement said that the Government will take over the liability for outstanding interest as on 31.12.2013, but the borrower would have to pay interest for the period after 1.1.2014.
Chidambram in his Budget speech said that nearly 9 lakh students borrowers will benefit to the tune of approximately Rs2, 600 crore.
He said that a sum of Rs 2,600 crore will be provided in the current financial year itself and this amount will be transferred to the Canara Bank.
Chidambaram said that the Central scheme for interest subsidy was introduced in 2009-10 in respect of education loans disbursed after 1.4.2009. However, students who had borrowed before 31.3.2009 struggled to pay interest during the period of study and they deserved some relief.
As per the Finance Minister, 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.
We assume that those students who have already paid the interest of the same period will also benefit from this scheme and be eligible for refund.
Moratorium period is the duration from date of disbursement of loan, during which the borrower is not required to pay EMI but the outstanding continue to incur interest.
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