Banks stand back in granting educational loans

Only six percent distribution in the State, four per cent in Aurangabad

VAIBHAV PARWAT

Aurangabad, Sep 14:

With many people queuing up for education loans for higher education, only Rs 606 crore has been disbursed so far out of the target of Rs 10,279 crore this year by the banks in the State. This amount is only six percent. So far, Rs 161 crore have been disbursed in Aurangabad district to 500 beneficiaries.

In all, 19,749 students in the State were given education loans even though the target to distribute the loan was of 2.66 lakh beneficiaries. In Aurangabad, this ratio is only four percent. According to highly placed sources, banks were being asked to increase disbursement of education loans within 15-30 days and loans up to Rs 7.5 lakh should not be rejected on frivolous grounds such as CIBIL scores, ineligibility of courses, and seeking collateral security. Banks have also been asked to provide guidance to education loan seekers under the Central Sector Interest Subsidy Scheme for students with annual family income up to Rs 4.5 lakh. However, the bank union members say that this will put pressure on banks as non-performing assets (NPAs) in education loans continue to rise due to arrears of small loans up to Rs 7.5 lakh. Giving more information Sundar Pagote, member of the All India Bank of Maharashtra Employees Federation said, it is difficult for fresh graduates to find jobs immediately after completion of course. Banks have introduced collateral in case of loan default. Till June 30, 2022, the banks in the district have distributed education loans worth Rs 161 crore to 500 students. This is just four percent of the target. However 8 per cent of education loans disbursed by the PSBs have turned into NPAs. Out of Rs 200 crore disbursed education loans, Rs 60 crore has not been returned.

Huge difference in interest charged

More than 15,000 new borrowers had applied for education loans between January and August in the district. The interest rates in government banks is 8.5 per cent to 10.5 percent. The interest rate in private banks and finance companies is between 13 percent to 17 percent.

Outstanding dues of Rs 8587 crore

According to sources, so far, 1.72 lakh education loan accounts in the State have an unpaid dues of Rs 8,587 crore. From this, 15,938 accounts have an outstanding dues of Rs 358 crore.

Who can apply and documents required

A student can avail the loan with the parents or guardian taken as co-applicants. Banks provide education loans for graduation, PG, diploma or professional courses. The banks require documents such as admission or acceptance letter from the institution, college fee structure, Class X, XII and graduation (if applicable) mark-sheets. Income documents of the applicants including bank statements, salary slips and income tax returns are needed too. A pre-admission sanction of the loan can be availed for the purposes of application to universities abroad.