Education loans: Banks told to set up grievance redress mechanism .

The Finance Ministry has asked public sector banks to put in place a three-tier grievance redressal mechanism to sort out problems being faced by students in obtaining education loans.

Banks have also been asked to make education loan applicants aware of the mechanism — at the branch, zonal office and head-office levels — at the time of submission of loan application.
 Besides, the ministry wants banks to introduce a system of review by the next higher authority where application for education loan is rejected.

These directives come in the wake of the Finance Minister’s observation that students wanting to get education loans were facing a number of problems.
Problem areas: 
The problems being faced by students include bank managers insisting on service area approach (SAA) in Kerala and Tamil Nadu; and refusing loan to management quota candidates and to students pursuing B.Sc (Nursing) in Kerala. Further, at times, managers reject education loan applications without any valid reasons.

A bank-wide committee headed by T. M. Bhasin, Chairman and Managing Director, Indian Bank, has decided to write to the lead banks in Kerala (Canara Bank) and Tamil Nadu (Indian Overseas Bank) to ensure that bank branches do not reject any education loan application merely because a village has been allocated to another bank branch.
Merit-based selection:
The committee is of the view that a student who qualifies on the basis of merit but chooses to pursue a course under management quota for reasons of proximity or choice of discipline deserved to be reckoned as a meritorious student.

For assessment of limits in such cases, it has been decided to consider the fee fixed by the State Government or a Government-approved regulatory body for admission to payment seats under the common admission process. Keeping this in view, the eligibility criteria would be suitably modified in the Indian Banks’ Association’s model education loan scheme.
Nursing courses :
In the case of nursing courses, the committee is of the view that regular degree/diploma courses approved by the Indian Nursing Council may be considered for loans by banks.
Banks’ feedback: 
Banks have given feedback to the Ministry that they have put in place systems and procedures to bring to the notice of the student community about the procedure for getting education loan. They have also provided details of the officials to be contacted for any queries/complaints in regard to the loan.

Further, most of the banks are providing online facility for submission/sanction of loans which will reduce complaints to a great extent.
Key word: public sector banks, grievance redressal mechanism, education loan problems, service area approach, management quota candidates, meritorious students, sanction of loans