Increasing level of non performing assets (NPAs) in the education loan sector has pressurized banks to take stringent steps in closing the loopholes present in the system and also to keep a watch on the students.
Mr H.S. Upendra Kamath, Executive Director, Canara Bank said, “We need to assess the repayment capacity of the borrower, which comprises two components – of the parent and of the student himself after he gets employed, which depends upon the course he has selected, the employment potential of the course and the track record of the institution as far as placement is concerned”.
At the end of the Q1 of this fiscal, it was seen that the education loan portfolio was Rs 2,976 crore covering 1.71 lakh students. NPAs in this sector have posted a big increase in a year’s time by around 85%.
He added, “These factors will hereafter play a major role in sanctioning educational loans, particularly loans up to Rs 4 lakh where there is no security involved”.
He said further, “Going forward, we hope that recovery in educational loans will also improve”.
Canara Bankhas strengthened its checking system, as “not all overdues arise from genuine problems,” he added. He also elaborated, “Current whereabouts of students are to be ascertained with help from colleges and parents; and wherever these efforts do not yield results, appropriate action would be taken.”