New Delhi, Dec 15: The gross non-performing assets (NPAs) in outstanding education loans of public sector banks (PSBs) have declined sharply from 7 per cent in 2020–21 to 2 per cent in 2024–25, indicating a significant improvement in asset quality, according to data shared by the Reserve Bank of India (RBI).
The information was provided by Minister of State for Finance Pankaj Chaudhary in a written reply to a question in the Lok Sabha on Monday. The RBI, however, does not maintain state-wise data on NPAs related to education loans.
The minister said that credit-related decisions of regulated entities are governed by their board-approved loan policies within the framework of regulatory and statutory requirements. Banks take lending decisions in line with these policies and the terms and conditions agreed upon with borrowers.
To strengthen recovery mechanisms and address stressed assets, the RBI has introduced several measures, including the Prudential Framework for Resolution of Stressed Assets under the RBI (Commercial Banks – Resolution of Stressed Assets) Directions, 2025. The framework focuses on early recognition and time-bound resolution of defaults.
The government informed the House that all scheduled commercial banks have been advised by the RBI to adopt the Model Education Loan Scheme (MELS), last amended on March 21, 2024. Under the scheme, education loans up to ₹7.50 lakh do not require collateral security or third-party guarantees, provided the borrower is eligible under the Central Sector Interest Subsidy Scheme (CSIS) or the Credit Guarantee Fund Scheme for Education Loans (CGFSEL).
In addition, public sector banks may also extend collateral-free education loans beyond ₹7.50 lakh on a case-to-case basis, in accordance with their board-approved policies. The RBI has also advised banks not to mandatorily seek collateral security for education loans up to ₹4 lakh.
The minister further highlighted the launch of the PM Vidyalaxmi scheme on November 6, 2024, which aims to support meritorious students by facilitating collateral-free and guarantor-free education loans through a simplified and transparent application process. The scheme is targeted at students securing admission to top-quality higher educational institutions, ensuring that financial constraints do not hinder access to higher education.
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