A recent press report said that the government has asked banks to increase the share of educational loans in total credit portfolio. The loan portfolio of banks includes home loan, personal loan, vehicle loan, business loan, agri loan etc. along with the educational loan.
Reports said that due to the pressure from the government, banks which are unwilling to fund more students have decided to revamp their education loan schemes by increasing the credit tenure and funding more than one person per family for loans up to 4 lakh.
Mr. K. Unnikrishnan, deputy chief executive, Indian Banks Association said that the revised scheme is forwarded to the government and that it is expected to be more customer-friendly and cover large number of applicants. He said that the modifications to student loans are done after reviewing the current model.
Banks do not seek collateral on education loans up to 4 lakh; loans above 4 lakh require joint application and collateral at present. IBA has said that banks will now consider more than one member of the family for loans below 4 lakh.
Banks currently, don’t give loans to more than one member of a family as a safeguard measure against defaults.