“Loans granted to educational institutions will be eligible to be classified as priority sector advances under micro and small (service) enterprises,” a master circular recently issued by the RBI said.
The RBI circular, however, made it clear that only educational institutions which satisfy the provisions of Micro, Small and Medium Enterprises Development (MSMED) Act will be eligible under the category.
Section 7 (b) of the MSMED Act defines micro and small-service enterprises and educational institutions as those which have investment in equipment not exceeding Rs 10 lakh and Rs 2 crore respectively. To get priority sector loans from any bank, the educational institutions will also have to be either registered as a trust or society or a not-for-profit Section 25 company under the Companies Act, 1956.
Until now only students were eligible for loans under priority sector, apart from agriculture sector, micro and small enterprises, micro credit and housing. Educational loans under priority sector lending included loans and advances granted to only individuals for educational purposes up to Rs 10 lakh for studies in India and Rs 20 lakh for studies abroad.
Published 26 September 2011, 18:24 IST