Govt directs banks to implement interest subsidy scheme

In a letter written to heads of all scheduled commercial banks, the Ministry of Human Resources and Development asked them to take necessary action in adopting and implementing the scheme so that its benefits accrue to eligible students.
The scheme is effective from the academic year 2009-10, it said. For 2010-11, the government has made a provision of Rs 500 crore for the scheme.

According to the scheme announced in last year's Budget, students from the weaker section will be exempted from paying interest on education loans during the moratorium period.
Moratorium period is defined as course period plus one year or six months after getting job, whichever is earlier, as prescribed under the Educational Loan Scheme for the Indian Banks' Association.

The subsidy scheme will cover loans taken by such students from scheduled banks to pursue any approved course in technical and professional streams at recognised institutes in the country.

However, only those students whose family income is less than Rs 4.5 lakh per annum will be eligible under the scheme.