The public sector banks (PSBs) in fact reduced its main lending rate of the trade level (BPLRs) since October, 2008 loans and education are linked to BPLR. The rates of interest out by Reserve Bank of India (RBI) and government issued no directions to banks on interest rates. But, the government has, from time to time, emphasizing the public sector banks (PSBs) to provide the appropriate credit to the needy sectors of the economy at reasonable interest rates. As per the instruction of the model lends schemes Indian banks ‘Association, banks are carrying the simple interest on educational loans up to Rs. 4 Lakhs in the main lending rate of the trade level (BPLR) and above Rs. 4 Lakhs in BPLR + 1%. Further, banks are required to provide the education loan upto Rs. 4 Lakhs without security. In response to the reduction in key policy rates of the RBI and the emerging economic situation, the banks themselves have reduced the rates of interest on credit in recent months.
