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Public sector banks highlight technical issues hindering the PM Vidyalaxmi education loan scheme's effectiveness.​

About PM Vidyalaxmi Scheme

It is a Central Government initiative announced in 2024, as Central Sector Scheme, to help students pay for higher education.

Students who get into one of India’s top 860 Quality Higher Educational Institutions (QHEIs)—think IITs, IIMs, or top universities—can apply.

The loans are collateral-free and guarantor-free, and the government provides a 75% credit guarantee for loans up to ₹7.5 lakh. For economically weaker sections (EWS) with family income below ₹8 lakh, there’s also a 3% interest subsidy during the moratorium period (while they’re studying).

The scheme aims to support 22 lakh students, ensuring money doesn’t stop them from studying.

Recent Update

Public sector banks (PSBs) are facing technical glitches that make it hard to process loan applications.

• Login Issues: Bank staff keep getting kicked out of the portal due to server errors or auto logouts.
• Data Migration Failure: Old applications from before the new portal aren’t transferring properly. This means banks can’t track or process earlier requests, leaving students in limbo.
• Slow Progress: As of April 1, 2025, banks received 2,963 applications, but 76% (about 2,252) are still pending.

These issues hinder banks and delay loans, meaning students can’t get funds to start or continue their studies.

Recently, the Finance Ministry asked PSBs to run awareness campaigns because the scheme isn’t getting enough applications—only 2,963 so far, which is small compared to the goal of helping 22 lakh students. 

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Source:

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