New Delhi: India’s public sector banks have sharply improved the quality of education loans, with gross non-performing assets falling from 7% in FY 2020-21 to 2% in FY 2024-25, the Reserve Bank of India has informed.
Sharing the information in Lok Sabha on Monday, Minister of State for Finance Pankaj Chaudhary also mentioned that the RBI does not maintain state-wise data on education loan NPAs. Credit decisions by banks remain largely deregulated and are governed by board-approved loan policies, within the framework of regulatory and statutory requirements and individual loan agreements.
To strengthen recovery and address stress, the RBI has rolled out the Prudential Framework for Resolution of Stressed Assets under its 2025 directions, aimed at early recognition and time-bound resolution of defaults.
All scheduled commercial banks have been advised to adopt the Model Education Loan Scheme, last amended in March 2024, which provides need-based loans without collateral or third-party guarantees up to ₹7.5 lakh for eligible students under government subsidy or guarantee schemes. Public sector banks may also extend collateral-free loans beyond this limit on a case-by-case basis.
In addition, the PM Vidyalaxmi scheme, launched on November 6, 2024, enables meritorious students admitted to top higher educational institutions to access collateral- and guarantor-free education loans through a simplified, student-friendly process.