RBI to reduce Risk Weightage on Education Loan

The Reserve Bank of India (RBI) is set to reduce risk weightage on educational loans to 75 per cent from 125 per cent.

This means that more funds will be made available at banks for education loans.

However, there will be no immediate reduction in interest rates on education loans. Currently, interest rates on educational loans are in the range of 11 to 11.50 per cent. On an average, banks lend a maximum of Rs 7.5 lakh for studies in India and a Rs 20 lakh for studies abroad. The interest rate on loans up to Rs 4 lakh is based on the bank’s benchmark prime lending rate (BPLR).

In most cases, loans above Rs. 4 lakh are at one percentage point over the BPLR.