Educational loan

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Educational Loan
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Education loans Fin Min upset over banks delay
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• The Finance Ministry has expressed displeasure at
  the public sector banks on the unnecessary delays
  in disposing the education loan applications.
• There are mainly three issues adherence of
  timeline, tapering growth, and high regional
  disparity regarding education loan, a senior
  Government official told Business Line while
  adding that banks have assured for necessary
  course correction.

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Delay in disposing

•  The government also wants these banks to treble
  their growth in disbursement during the current
  fiscal. On the issue of timeline, draft model
  education loan scheme, as prescribed by Indian
  Banks Association stipulates that loan
  applications have to be cleared in the normal
  course within a period of 15 days to a month, but
  not exceeding the time norms given for disposing
  of loan applications under priority sector
  lending.

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Growth dips

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• However, there are complaints that time taken is
  longer than this, the official said, adding that
  banks have been asked to strictly follow the time
  line which they publish on their website.
• In terms of growth, number of accounts dropped to
  25.69 lakh at the end of 2014-15 from 25.73 lakh.
• However, outstanding amount rose to 61,967 crore
  from 28,256 crore reflecting a growth of 6 per
  cent.
• Now for the current fiscal, public sector banks
  have been asked to achieve 20 per cent growth in
  disbursement and 15 per cent growth in number of
  accounts.
• At the same time, focus should be on institutions
  with good record and also with better campus
  placement record.

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Regional break-up

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• In terms of regional distribution of loan during
  2014-15, Southern region alone accounted for 53
  per cent, while shares of Central, Eastern,
  Western and Northern were 14, 12, 11 and 9 per
  cent, respectively.
• The North-Eastern region has a share of one per
  cent. Finance Ministry officials feel that heavy
  concentration in one region alone with more loans
  to students in institutions with poor
  employability records is responsible for
  education loan turning bad or non performing
  assets (NPA).
• Industry sources said that against the overall
  NPA of 5.5-5.6 (as a percentage of total
  advances), bad debts in education loan has gone
  up to 8-8.5 per cent.

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Keeping all these in mind, the official said that
banks have been advised to ask their branches
to follow the revised guidelines of Model
Educational Loan Scheme scrupulously. They have
also been asked that loans may be granted to
meritorious students under Management Quota and
loans should not be rejected on the ground of
non-service area of the branch concerned.
Reasons for rejection must be conveyed to the
applicant, he said.
Source http//www.thehindubusinessline.com/news/
education/education-loans-finmin-upset-over-banks-
delay/article7364146.ece
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