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
