Issues with education loans

What is the status of educational loans in India?

• NPA level of education loans are high in India.
• Loans were more likely not offered to the poor.
• The branch managers don’t have the power to grant education loans.
• Many of first-generation learners are applying for the loans.
• The poor student population either need to sell their assets or get loans of mortgage.

What are the issues with educational loans?

• In actual practice the loans given by the banks were few.
• Banks invariably insisted on collateral, but banks were forbidden to ask for collateral except in the case of a loan in excess of

Rs 7.5 lakhs.

• The average growth rate of the loan in the last years is just 5.3 per cent.
• Due to NPA’s in other sectors as well as in education sector, banks think that education loans are not a priority.
• The graduates are unable to repay the loans because they cannot find jobs in a period of jobless growth.
• For collection of loans banks are going after borrowers like savage moneylenders.

How marginal class are denied of loans?

• Bank management rejects applicant that her place of residence or the place of the college did not fall within the service area of the branch.
• If a persevering applicant was able to cross all the hurdles, the ultimate weapon of denial was to demand collateral.
• In case the student was able to provide the collateral citing some obscure rule only a part of the amount applied for was sanctioned.

What are the measures taken so far?

• Branch manager don’t have deciding powers on granting such loans.

• The applications be sent to the regional office or the head office for appraisal and decision.
• The concept of service area was abolished.

Source: Indian Express