Finance Minister P. Chidambaram Saturday said an education loan is a right of every student and the officials with the public sector banks (PSBs) who are found rejecting a large number of applications may be penalised for denying the loans.
"Bank account is a right of an individual. It is not a gift of a bank and bank loan is a right of every student," Chidambaram told reporters here after meeting with the chiefs of public sector banks (PSBs) adding that the issue of education loans is close to his heart.
"No application from a deserving candidate, if he/she meets the parameters, should be turned down by the (bank) officer receiving it. If a loan is not given, the decision can be taken only at one level higher to the officer receiving the loan application," Chidambaram said.
This was the first meeting between Chidambaram and the chiefs of PSBs since he took over charge of the finance ministry Aug 1.
The agenda of meeting contained four issues relating to education loans including expansion, time-bound disposal of applications, education loans for meritorious students admitted under management quota and loans for professional diploma courses.
According to Chidambaram, under the new policy if an increase in education loan rejections is detected then there can be punitive actions against the branch manager.
"One case of application rejection or two cases may be an oversight issue, but if the branch reaches a critical number like five or ten cases of rejection then there can be action against the manager,” said Chidambaram.
“It is very important that every students who meets the parameter must get a loan because it's a right."
The PSBs are working up on the modalities surrounding the Budget announcement of a credit guarantee fund for education loans. They are also working on a mechanism for rating of institutions, courses and students for loan disbursement.