Under the scheme, the government will pay the outstanding interest liability for the period till December 31, 2013, but the borrower would have to pay interest for the period after January 1, 2014.
Presenting the interim budget in the Lok Sabha today, the Union Finance Minister Chidambaram said that a sum of Rs 2,600 crore will be provided in the current financial year itself and this amount will be transferred to the Canara Bank. Mr. Chidambaram said that the central scheme for interest subsidy was introduced in 2009-10 in respect of education loans disbursed after April 1, 2009.
However, students who had borrowed before March 31, 2009, struggled to pay interest during the period of study and they deserved some relief, the finance minister said.
At the end of December 2013, public sector banks had 25,70,254 student loan accounts and the amount outstanding was Rs 57,700 crore.