Relief for Students! Study Loan Limit to Rise To 
7.5 Lakhs
The Credit Guarantee Fund Trust for Higher and Vocational Education will have a corpus of 
2, 500 crore. The trust fund will ensure the loan extension by the bank to the limit of 75 percent of the amount defaulted by the student. In special cases of extra ordinary deserving candidates banks can approach the trust fund to cover education loan above 7.5 lakhs without any third party guarantee. To avail the credit guarantee the banks just need to pay a nominal guarantee fee of 1 per cent per annum of the loan amount sanctioned by it.
The Education loans under 4 lakhs are categorized as priority sector lending. And few banks under the Indian Banks Association have been worried as absence of third party assurance often leads to non re-payment of educational loans.
"Delinquency in education loans up to 4 lakhs is very common. In the absence of a guarantor, students often do not repay. This is causing stress on bank balance sheets," said an official at a public sector bank, quoted mydigitalfc.com. The credit guarantee fund is expected to get finalized by the time the budget is presented at the end of this month.
