Patna: The state government on Saturday constituted the Bihar State Education Finance Corporation (BSEFC) to ensure timely loan under the Student Credit Card (SCC) scheme to students who want to continue studies after Class XII.

A decision in this regard was taken at a cabinet meeting chaired by chief minister Nitish Kumar at the state secretariat here.

"BSEFC has been created to make the SCC scheme successful and provide timely loans to students. It will disburse loans instead of banks, which would be used by the beneficiaries to pay their fees," cabinet secretariat department special secretary Upendra Nath Pandey said. He added that the corporation will start functioning from April 1 with a paid-up equity capital of Rs 9.5 crore.

The cabinet also approved a proposal to create 131 posts for the corporation, which will be headed by a chief executive officer (CEO)-cum-managing director (MD) at a monthly salary of Rs 2.5 lakh.

A post each of general manager (administration) and general manager (operations) has also been created. The rest of the posts include manager, assistant managers, IT manager, company secretary, legal adviser, computer operators and data entry operators.

SCC is a scheme under Nitish's "seven resolves for a developed Bihar". It was launched with much fanfare on October 2, 2016, to help youths wishing to pursue higher studies after Class XII with an education loan of up to Rs 4 lakh. The state government has given banks a guarantee to fully reimburse the principal and the interest in cases of default.

The government had fixed a target to cover 5 lakh students during financial year 2016-17 and to increase the number by 1 lakh every year, effectively covering 9 lakh students by 2020-21.

However, the scheme gasped to take off in a full-fledged manner, mostly because banks adopted various tactics to stall or delay disbursement of loans. Just a few thousand students have got loans under SCC. "Under SCC, loan distribution was to be done by banks after the district registration and counselling centres (DRCC) process the applications. However, desired distribution of loans could not be achieved because of complexities in the 'loan model' or banks, as well as, their indifference towards the scheme," Pandey said.

The cabinet special secretary added that the state government subsequently decided to create BSEFC to ensure success of SCC and disburse all loans under it.

The state cabinet on Saturday discussed just two agendas, of which one was related to budgetary provisions made under the education department for financial year 2018-19.