dear friends
Recently, when we received mails through Action 2020 partner organisations on how highly deserving poor students were not supported by banks under education loan schemes, we formed Education Loan Task Force to bridge the relationship between poor students and banks and also to create awareness about edu loans.
Out of curiosity, we wanted to study how banks have performed under education loan schemes in India.
Performance of PSU Banks under edu loans
As at 30th Sep 2009, the total bank credit stood at nearly Rs.28,307 billion. Out of this edu loan forms part of 32,366 crores, which is 1.14% of their lending. This has benefited 17.15 lakh students. As was discussed in our ELTF meeting, when banks lend edu loans, they create 'intangible assets' which is useful for the country.
Out of the total of 17.15 lakh students, State Bank of India (3.82 lakh students), Canara Bank (1.56 lakh) and Indian Bank (1.39 lakh) have helped more number of students. We congratulate them for supporting more students. Indian Bank's performance in terms of their edu loan outstanding against their total bank credit is higher at 3%.
In view of the importance of education and knowledge society for development of our country, the banks have to step up the education loans to a minimum of 5 to 7 percent of the total bank credit, as against the existing level of 1.14%. More number of students need to be supported by the banks.
Why the banks hesitate to give edu loans?
During our conversation with many senior level and branch level bankers, we observed that they are hesitant to give edu loans to students as they fear that these loans may likely to become bad, because of many reasons. They have also quoted instances of edu loans becoming bad due to the students leaving the address without informing the bank.
Through ELTF, we are also creating awareness among students for the prompt repayment of the edu loans, as per the schemes. We agree that the students should be more loyal and responsible to the funding institutions, so that the banks could get more encouragement to support the students.
Shocking facts about Non Performing Assets NPAs of PSU Banks.
The reluctant attitude of bankers for lending under edu loans under the pretext that these loans are likely to become bad, made me to study further on the bad loans position or the data about overall Non Performing Assets of PSU Banks. The data is highly shocking.
All India Bank Employees' Association (AIBEA) has recently published a booklet containing the details of willful defaulters of PSU Banks as at 30th Sep 2007, based on the information available through RBI and other sources. This is the latest details available for study. The current position also may remain more or less same.
2369 accounts, contribute 50% of NPA of PSU Banks, while the balance spread over 44 lakh accounts :{
As at Sep 2007, the total overall NPA of all the PSU Banks was around 39,000 crores spread over 44.2 lakh accounts. Out of this 2369 accounts alone account for Rs.20,140 crores. That means nearly 50 percent of the PSU Bank's declared NPAs are locked up in just around 2369 accounts and the balance of 50% in nearly 44 lakh accounts.
It is a matter of serious concern and media and good Parliamentarians also should start investigation this and protect the public funds being locked by handful of persons.
What is the moral of the story?
Even the declared NPA of PSU Banks is only at 2%. They why should they suspect about the edu loans that they may become NPAs. If their NPA level is less than 2% of the total bank credit, it shows that they have 98% good loans. What else they want?
Bankers telling that granting edu loans will become bad is only a myth. Even among the NPAs only handful of big borrowers (2369 as stated earlier) contribute to the large scale NPA. They should remember that poor people are generally honest.
Srinivasan
Moderator
91766 50273
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