Student’s education loan not to be repaid by family in case of death

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Cabinet decisions

Bhopal, August 19, 2015 (Ataullah Faizan): At its meeting chaired by Chief Minister Mr. Shivraj Singh Chouhan here today, the cabinet took an important decision that family of student will not have to repay his/her education loan in case of his/her untimely death in accident or for any other reason. The state government and concerning bank will repay the loan and concerning family will not be responsible to repay it. In this way, at least there will be no financial burden on families having gone through trauma of child’s death. The scheme will also be applicable in cases of permanent disability. The cabinet decided that loanee students will be connected with 2 new insurance schemes launched by the Central government for social security. Annual premium of Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Yojana is Rs. 12 and Rs. 330, respectively. Generally, duration of education loan is between 7 and 10 years. On an average for 10 years, burden of only Rs. 3,420 will fall on a student. Insurance cover of Rs. 4 lakh will be given under both policies. Banks will ensure insurance of students under existing education loan accounts as well as future cases under both the schemes. If a student dies, then after receiving claims under the insurance schemes as on date of NPA, 50 percent of remaining amount will be paid by state government to banks as subsidy. Remaining 50 percent of loan will be waived off by bank. Under the scheme, it has been provisioned that efforts would be made for payment to banks within 60 days after case is brought to state government’s notice by bank. This arrangement will be made only in the case where a student is not covered by life insurance. If bank has given life insurance cover against education loan to a student, then bank will settle loan with amount received as insurance claim.

It is clearly mentioned in the provisions that this scheme will be applicable only in case of untimely death or permanent disability. The state government has decided to constitute a committee headed by ACS Finance which will have representatives of concerning bank and State Level Bankers Committee as members. Commissioner Institutional Finance will be Member-Secretary of the committee. Information about such cases coming to notice of state government/bank will be immediately given to the Member-Secretary so that a meeting can be convened and decision taken.

Concerning bank will make available following documents available with parents/guardian of student or self to the committee:- Photocopies of bank’s sanction letter, date and bank statement of loan account, marksheets to show educational qualification of student, permanent disability certificate and post-mortem report in case of untimely death due to accident or any other reason (if applicable).

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