Bank officers rejecting education loan applications without sufficient reasons would be penalised. Finance Minister, P Chidambaram has said that no application should be turned down by the officer who is receiving it. It can only be turned down by one level higher. They will now penalise branch managers who turn down, say, 5/10 deserving applications which are overturned by a superior officer.
The Indian Bank Association (IBA) would come out with a new circular on education loans in the next few days.
The government has moved a Cabinet note for setting up of education loan credit guarantee fund, which make available loans for students. The note will go to Cabinet in about a week or two and the government is hoping to finalise the scheme and launch the fund before the end of the calendar year.