Government tells PSBs to clear education loans within 15 days, streamline approvals
public sector banks
to process education loan applications within 15 days of submission and establish a centralised credit processing system with clear internal standard operating procedure for expeditious approvals, said people familiar with the matter.
In case of rejection or return of a loan application, it must be approved by the next higher authority and clearly communicated to the student with reasons for the decision, they said.
"A series of meetings have been held with banks over the last two months to discuss delays in processing of education loan applications," a government official said on condition of anonymity, adding that it has been decided that lenders will ensure decisions on loan applications are made within three to five working days.
Sanction of education loans is based on proper documentation and depends on other factors including co-applicant or guarantor. The disbursement is done in stages as per demand directly to the educational institute. The average time for most banks in normal course is within a month.
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Banks have also been directed to clear all cases pending till May and submit a status report.
The move follows several representations to the government on the issue. "There were some cases where loans were sanctioned, but disbursals were on hold due to unsatisfactory documentation. Those cases have also been put on the fast track," the official said.
Banks have been told to seek only those documents that are stipulated by Indian Banks' Association Model Education Loan Scheme.
A senior bank executive said that lenders had already begun aligning their loan operating system with the Vidya Laxmi portal.
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This is an AI-generated image, used for representational purposes only. The finance ministry has asked public sector banks to fast-track education loan applications, directing them to process requests within 15 days of submission. Banks have also been told to set up a centralised credit processing system with clear internal procedures to ensure timely approvals, according to people familiar with the matter. If a loan application is rejected or returned, the decision must now be approved by a higher authority and the student must be clearly informed of the reasons, the sources said, according to ET. "A series of meetings have been held with banks over the last two months to discuss delays in the processing of education loan applications," an anonymous government official said, as quoted by ET. The source further added that it would be ensured by the lenders that decisions are made within three to five working days. While most banks currently take up to a month to process education loans, the ministry wants this timeline shortened. Sanctions will continue to depend on proper documentation, the presence of a co-applicant or guarantor, and other eligibility factors. Disbursements will be made in instalments, directly to the educational institution. Banks have also been instructed to clear all pending applications up to May and submit a detailed status report. The push comes after the government received several complaints about delays. 'There were some cases where loans were sanctioned, but disbursals were on hold due to unsatisfactory documentation. Those cases have also been put on the fast track,' the official added. To streamline the process, banks have been told to stick only to documents listed under the Indian Banks' Association 's Model Education Loan Scheme. A senior bank executive said lenders are now working to align their internal systems with the Vidya Lakshmi portal to speed up operations. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
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Government tells PSBs to clear education loans within 15 days, streamline approvals
The finance ministry has directed public sector banks to process education loan applications within 15 days of submission and establish a centralised credit processing system with clear internal standard operating procedure for expeditious approvals, said people familiar with the matter. In case of rejection or return of a loan application, it must be approved by the next higher authority and clearly communicated to the student with reasons for the decision, they said. "A series of meetings have been held with banks over the last two months to discuss delays in processing of education loan applications," a government official said on condition of anonymity, adding that it has been decided that lenders will ensure decisions on loan applications are made within three to five working days. Sanction of education loans is based on proper documentation and depends on other factors including co-applicant or guarantor. The disbursement is done in stages as per demand directly to the educational institute. The average time for most banks in normal course is within a month. Live Events Banks have also been directed to clear all cases pending till May and submit a status report. The move follows several representations to the government on the issue. "There were some cases where loans were sanctioned, but disbursals were on hold due to unsatisfactory documentation. Those cases have also been put on the fast track," the official said. Banks have been told to seek only those documents that are stipulated by Indian Banks' Association Model Education Loan Scheme. A senior bank executive said that lenders had already begun aligning their loan operating system with the Vidya Laxmi portal.
