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Centre may include regional rural banks under guarantee cover

September 20, 2022

Centre may include regional rural banks under guarantee cover
The Centre is actively considering roping in regional rural banks (RRBs) under the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) in an earnest attempt to push banks to disburse more education loans.

“We are examining whether a separate structure is required or this can be incorporated within the existing architecture,” an official familiar with the matter told ET.

The CGFSEL covers default in education loans of up to ₹7. 5 lakh without any collateral security and third-party guarantee. Currently, the fund extends guarantee cover against default in education loans sanctioned by public, private and foreign banks.

It is worth noting here that the move assumes significance as the Centre is rolling out several policy measures to further boost the regional lenders.

On August 25, the Centre evaluated the growth and disbursal status of education loans by public sector banks (PSBs).

The financial daily cited the official as saying, “Banks were asked to look at the delays in the sanctioning and disbursal process, and fast track the processes.”

State-controlled banks have achieved about 9 per cent of the ₹20,450-crore education loan target for FY23 till June this year. Integrating RRBs under the credit guarantee fund will push education loans, the official mentioned.

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