Adding without collateral education loans Bankers say the roll-out of a government loan program to multiple sectors will help lenders recover losses.
Maybe some kind of pillow in education loans Bankers said the segment had one of the highest delinquency rates if the government included it in an emergency credit line guarantee scheme.
“In the total portfolio of educational loans, the ratio of bad loans is 9.55%, for loans up to ₹4 lakhs where no collateral is required, ”said a private sector banker, speaking on condition of anonymity.
So far, banks and non-bank financiers have issued loans in the amount of ₹2.69 trillion 11 million small businesses under ECLGS. Union Finance Minister Nirmala Sitharaman said on June 28 that spending has been increased to ₹4.5 trillion from ₹3 trillion
The aforementioned banker said that last year the Reserve Bank of India (RBI) also allowed lenders to classify education loans before ₹20 lakhs as a priority sector lending. While there is incentive to lend to this sector, lenders are not overly interested in loans below a certain threshold for fear of late payments. Education loans up to ₹4 lakhs do not require collateral and education loans are up to ₹7.5 lakhs can be obtained with a collateral in the form of an appropriate third party guarantee. However, education loans are higher ₹7.5 lakhs require material security.
State governments are promoting their own forms of guaranteed loans, but experts are concerned about their implementation as banks have a single national loan policy. Last week, West Bengal’s cabinet approved a plan to support education loans worth up to ₹10 lakhs and maturity in 15 years. News agency quotes Chief Minister Mamata Banerjee PTI as the saying goes, the loans will be available for undergraduate, graduate, doctoral and postdoctoral studies in India or abroad. A similar scheme was launched by the Delhi government in 2015.
“The dockyard recession, as well as the impact of the COVID-19 pandemic on education and employment opportunities, has worsened, with default rates reaching 9.55% recently,” said Adhil Shetty, chief executive of financial services. BankBazaar.com marketplace.
“While there is a default rate of education loans, we hope that government intervention in the form of loan guarantee schemes specifically targeting education loans will make things much easier,” Shetty said.
India’s outstanding student loans amounted to ₹As of December 31, 2020, according to data submitted to Parliament, Rs 89,884.
West Bengal, Bihar, Jharkhand, Odisha, Sikkim, Andaman and Nicobar collectively lost 14.21% of education loans, the highest among regions. According to the data, this indicator is topped by Bihar, which has a NPL ratio of 25.76%.
According to K. Srinivasan, organizer of the Task Force on Educational Loans, it is unclear how lenders will implement such a state policy. It is an association that helps deserving and poor students obtain bank loans for higher education.
“Banks may not be able to fully trust the promises of state governments to guarantee such loans, leading to reluctance by lenders,” Srinivasan said.
There is now a central government scheme that covers the burden of interest for economically weaker students seeking to pursue technical or vocational courses, he said.
Interest will start as soon as the loan is received, but the government allows a 12-month moratorium until the end of the course and bears interest during this period.
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