Patna: The state government will set up a corporation to disburse loans under its students' credit card scheme, deputy chief minister Sushil Kumar Modi announced on Monday.

He was speaking at a programme organised by the financial inclusion and development department of the Reserve Bank of India.

"The state government has decided to set up its own corporation for disbursing loans under the students' credit card scheme... as the banks are a bit reluctant in giving loans under this scheme," Modi said at the event.

Launched on October 2, 2016, the scheme entails helping students who want to pursue higher studies with education loan of up to Rs 4 lakh. The government has given a guarantee to the banks to fully reimburse the principle and interest amount in case of default. The government aimed to cover 5 lakh students in 2016-17, and to increase the number by 1 lakh every year to cover 9 lakh students by 2020-21. However, the scheme had benefit only 14,242 students till December 2017.

At Monday's event, bankers and representatives of the government blamed each other.

One banker said the scheme needed wider publicity as very few students were turning up to avail its benefits. Another banker said the district registration and counselling centres were not processing the applications properly, and banks were being forced to seek details from the applicants. One of the participating senior deputy collectors (banking), on the other hand, said banks were seeking unnecessary details, given that the state was the guarantor for all such loans.

A senior state government official said: "By setting up a dedicated corporation, the government wants to increase the number of beneficiaries of this scheme exponentially in the coming two years."