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EC stops implementation of education loan interest-waiver plan till polls

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The Election Commission has asked the government not to implement a Rs 2,600 crore scheme to provide a moratorium on interest payments on the education loans of 9 lakh students until the elections are completed.

The interest-waiver scheme can be implemented by the finance ministry after the election process, sources said. The Commission also asked the ministry to ensure that no publicity of the scheme is made during the election period, people with knowledge about the development added.

Voting in the Lok Sabha elections is scheduled to end on May 12 and counting will be taken up on May 16. In the 17 February interim Budget, union finance minister P Chidambaram announced the waiver of interest on education loans taken before March 2009 that were outstanding at the end of December 2013.

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“Since interest concession is being given to borrowers (who have availed of loans) after 1 April 2009, what we are saying is if there is any outstanding interest on the loan you took as on 31 December 2013, I am willing to take over the interest burden,” the Union finance minister had said.

“Our calculations show Rs 2,600 crore is the outstanding interest as on 31 December 2013. We are wiping out that burden from the shoulders of families, we are taking over the burden. This is huge relief to 9 lakh families,” he had said.

However, borrowers are required to pay regular interest after 1 January 2014. As per the announcement, Rs 2,600 crore was transferred to the designated Central Scheme for Interest Subsidy (CSIS) banker Canara Bank.

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