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Asset quality of education loans improves significantly in India: Pankaj Chaudhary
Dec-16-2025

Citing data compiled by the Reserve Bank of India (RBI), Minister of State for Finance Pankaj Chaudhary has said that asset quality of education loans witnessed significant improvement, with gross non-performing assets (NPA) of public sector banks (PSBs) reducing from 7% in FY 2020-21 to 2% in FY 2024-25, in terms of outstanding education loans.

Chaudhary further underlined several initiatives taken by RBI to improve recovery and to resolve incipient /established stress in banks including issuance of the Prudential Framework for Resolution of Stressed Assets under RBI (Commercial Banks - Resolution of Stressed Assets) Directions, 2025 which is a principle-based framework and provides for early recognition and resolution of default in a time bound manner.

Besides, all scheduled commercial banks (SCBs) have been advised by RBI to adopt Model Education Loan Scheme (MELS). The scheme inter alia provides need-based education loan and no collateral security or third-party guarantee is required for loans amount up to Rs 7.50 lakh, provided they are eligible for Central Sector Interest Subsidy Scheme (CSIS)/ Credit Guarantee Fund Scheme for Education Loan (CGFSEL).


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