5 Jan 2012
Dr K C Chakrabarthy
Deputy Governor
Reserve Bank of India
Mumbai
Dear Sir
On behalf of Educational Loan Task Force (ELTF), we convey our greetings to you for a happy and prosperous New Year and Sankaranthi.
As you know, Educational loan outstanding in Tamilnadu has always been around 25% of the total outstanding of the whole nation. This is mainly because of the opportunities for higher education and the awareness level are higher in Tamilnadu.
In your well researched speech on Challenges and opportunities in Trillion Dollar Economy ( http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=12340 ) and Challenges for next generation banking ( http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=12342 ), you have emphasised the importance of higher education and the importance of Educational Loan for the growth of our nation.
From the latest available information from SLBC on the Education Loan as at Sep 2011 in Tamilnadu, the Private Banks, do not play any role in granting educational loans in Tamilnadu. We have been receiving lot of grievances from the deserving poor students that they are being allotted private banks for educational loan purposes. Even though, RBI does not permit any service area approach for educational loans, the banks in various districts follow this practise to the disadvantage of the poor and deserving students. Private Banks never follow IBA model guidelines. Hence, the students are put to disadvantage.
Let me take you through quickly the educational loan position in Tamilnadu as the end of Sep 2011.
Total Educational loan outstanding
The total Bank credit outstanding of all the banks in Tamilnadu as on 30.9.2011 was Rs.3,88,170 crores. Out of this, all the banks have an outstanding Educational loan of Rs.12,103 crores. This is 3.12% of the total bank credit outstanding of all banks.
Contribution by State Bank of India group
Out of the total bank credit outstanding of Rs.84,274 crores, SBI group banks have an outstanding of Rs.2,617 crores. This is 3.1% of the total bank credit outstanding of their bank in Tamilnadu.
Contribution by Nationalised banks.
Out of the total bank credit outstanding of Rs.1,81,527 crores as at the end of Sep 2011, the educational loan outstanding was Rs.8,367 crores. This is 4.61% of the total bank credit outstanding of all Nationalised banks..
Top performers under Educational Loan in Tamilnadu
Indian Bank (Rs.2438 crores - 7.8% of Total Bank Credit outstanding of their Bank in TN), State Bank of India (Rs.2,258 crores - 3.10% of TBC in TN), Indian Overseas Bank (Rs.1697 crores - 5% of TBC in TN) and Canara Bank (Rs.1450 crores - 6.62% of TBC in TN) have done good work. Educational Loan Task Force complements them for their good work.
Performance of Private Sector Banks in Tamilnadu
There are 16 Private Banks operating in Tamilnadu. Out of Rs.91,484 crores of Total Bank Credit outstanding of all the Private Banks in Tamilnadu as at 30th Sep 2011, the outstanding under Educational Loan of all the Private Sector Banks was Rs.1080 crores. This is 1.18% of the Total Bank credit outstanding.
Top performers under Private Sector Banks in TN
Tamilnadu Mercantile Bank has shown an outstanding Educational Loan of Rs.776 crores, as against their Total Bank Credit outstanding of Rs.8063 crores. This is 9.63% of the Total Bank credit outstanding. Since this ratio is abnormally very high, we suggest that RBI may kindly recheck their classification of advances. We feel that they might have added the loans to the College owners for construction of colleges. If their data is correct, we compliment them.
Poor performance of Private Sector Banks
If Tamilnadu Mercantile Bank is excluded, the total Educational Loan outstanding of all new generation private banks is Rs.304 crores, as against the total bank credit outstanding of Rs.83421 crores. This is 0.36 % of the total bank credit.
HDFC Bank has an outstanding Edu loan of Rs.29.8 crores, as against their total bank credit outstanding of Rs.16,157 crores. This is only 0.2 percent of their Total bank credit outstanding TN.
ICICI Bank has an outstanding Educational loan of Rs.4.29 crores as against the Total Bank credit outstanding of Rs.17,312 crores. This is a pathetic 0.02 percent of their Total Bank credit outstanding as at Sep 2011.
Axis Bank has an outstanding of Educational loan of Rs.0.91 crores, as against their Total Bank credit outstanding of Rs.11,241 crores. This is also a pathetic 0.01% of the total bank credit outstanding.
Multinational banks draw blank under Educational Loan
There are 12 Multinational Banks operating in Tamilnadu with a total bank credit outstanding of Rs.15,127 crores. You will be surprised to see that the outstanding under Educational Loan is 'zero'.
Our humble submission
From the above, you may kindly understand as to how the Private Banks and the Multinational Banks give a scant respect to the policies of RBI and IBA for the social improvement. While they exploit the resources here, they are not giving back to the society. We have been repeatedly pointing out to you about their scant respect.
Right to Education Act gives responsibility to the private schools also. In the same way, RBI should thrust responsibility on the Private Banks and MNC Banks to be part of this social responsibility.
Even the Public Sector Banks, after the grant of educational loan, are not maintaining proper connectivity with the students. From ELTF, we have even suggested to all the banks to arrange for the 'relationship' programme during the semester holidays. Last year, based on our suggestion, Indian Bank started the contact programme and arranged seminars at different centres on employability. They covered around 8000 students and their parents. This helped them a lot to update their records and to develop loyalty towards the bank. ELTF appeals to RBI, to advise all the banks to organise contact programmes frequently with the borrower students, to bring them closer. This will also help the banks to reduce NPA level.
With warm regards
K. Srinivasan
Convenor
Educational Loan Task Force
www.eltf.in
9176650273
In your well researched speech on Challenges and opportunities in Trillion Dollar Economy ( http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=12340 ) and Challenges for next generation banking ( http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=12342 ), you have emphasised the importance of higher education and the importance of Educational Loan for the growth of our nation.
From the latest available information from SLBC on the Education Loan as at Sep 2011 in Tamilnadu, the Private Banks, do not play any role in granting educational loans in Tamilnadu. We have been receiving lot of grievances from the deserving poor students that they are being allotted private banks for educational loan purposes. Even though, RBI does not permit any service area approach for educational loans, the banks in various districts follow this practise to the disadvantage of the poor and deserving students. Private Banks never follow IBA model guidelines. Hence, the students are put to disadvantage.
Let me take you through quickly the educational loan position in Tamilnadu as the end of Sep 2011.
Total Educational loan outstanding
The total Bank credit outstanding of all the banks in Tamilnadu as on 30.9.2011 was Rs.3,88,170 crores. Out of this, all the banks have an outstanding Educational loan of Rs.12,103 crores. This is 3.12% of the total bank credit outstanding of all banks.
Contribution by State Bank of India group
Out of the total bank credit outstanding of Rs.84,274 crores, SBI group banks have an outstanding of Rs.2,617 crores. This is 3.1% of the total bank credit outstanding of their bank in Tamilnadu.
Contribution by Nationalised banks.
Out of the total bank credit outstanding of Rs.1,81,527 crores as at the end of Sep 2011, the educational loan outstanding was Rs.8,367 crores. This is 4.61% of the total bank credit outstanding of all Nationalised banks..
Top performers under Educational Loan in Tamilnadu
Indian Bank (Rs.2438 crores - 7.8% of Total Bank Credit outstanding of their Bank in TN), State Bank of India (Rs.2,258 crores - 3.10% of TBC in TN), Indian Overseas Bank (Rs.1697 crores - 5% of TBC in TN) and Canara Bank (Rs.1450 crores - 6.62% of TBC in TN) have done good work. Educational Loan Task Force complements them for their good work.
Performance of Private Sector Banks in Tamilnadu
There are 16 Private Banks operating in Tamilnadu. Out of Rs.91,484 crores of Total Bank Credit outstanding of all the Private Banks in Tamilnadu as at 30th Sep 2011, the outstanding under Educational Loan of all the Private Sector Banks was Rs.1080 crores. This is 1.18% of the Total Bank credit outstanding.
Top performers under Private Sector Banks in TN
Tamilnadu Mercantile Bank has shown an outstanding Educational Loan of Rs.776 crores, as against their Total Bank Credit outstanding of Rs.8063 crores. This is 9.63% of the Total Bank credit outstanding. Since this ratio is abnormally very high, we suggest that RBI may kindly recheck their classification of advances. We feel that they might have added the loans to the College owners for construction of colleges. If their data is correct, we compliment them.
Poor performance of Private Sector Banks
If Tamilnadu Mercantile Bank is excluded, the total Educational Loan outstanding of all new generation private banks is Rs.304 crores, as against the total bank credit outstanding of Rs.83421 crores. This is 0.36 % of the total bank credit.
HDFC Bank has an outstanding Edu loan of Rs.29.8 crores, as against their total bank credit outstanding of Rs.16,157 crores. This is only 0.2 percent of their Total bank credit outstanding TN.
ICICI Bank has an outstanding Educational loan of Rs.4.29 crores as against the Total Bank credit outstanding of Rs.17,312 crores. This is a pathetic 0.02 percent of their Total Bank credit outstanding as at Sep 2011.
Axis Bank has an outstanding of Educational loan of Rs.0.91 crores, as against their Total Bank credit outstanding of Rs.11,241 crores. This is also a pathetic 0.01% of the total bank credit outstanding.
Multinational banks draw blank under Educational Loan
There are 12 Multinational Banks operating in Tamilnadu with a total bank credit outstanding of Rs.15,127 crores. You will be surprised to see that the outstanding under Educational Loan is 'zero'.
Our humble submission
From the above, you may kindly understand as to how the Private Banks and the Multinational Banks give a scant respect to the policies of RBI and IBA for the social improvement. While they exploit the resources here, they are not giving back to the society. We have been repeatedly pointing out to you about their scant respect.
Right to Education Act gives responsibility to the private schools also. In the same way, RBI should thrust responsibility on the Private Banks and MNC Banks to be part of this social responsibility.
Even the Public Sector Banks, after the grant of educational loan, are not maintaining proper connectivity with the students. From ELTF, we have even suggested to all the banks to arrange for the 'relationship' programme during the semester holidays. Last year, based on our suggestion, Indian Bank started the contact programme and arranged seminars at different centres on employability. They covered around 8000 students and their parents. This helped them a lot to update their records and to develop loyalty towards the bank. ELTF appeals to RBI, to advise all the banks to organise contact programmes frequently with the borrower students, to bring them closer. This will also help the banks to reduce NPA level.
With warm regards
K. Srinivasan
Convenor
Educational Loan Task Force
www.eltf.in
9176650273
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