The ratio of non performing assets (NPAs) in education loans is going up thus worrying banks a lot. Banks have asked for help from the government in the form of a credit guarantee fund as safety. They have asked for a fund of minimum of Rs 2500 crore.
Bank estimation given to the finance ministry stated that there has been a 2% increase in NPA level of education loans as of March 31. The number was previously nearly negligible as of 2004-05.
The education loan schemelets the borrower borrow up to Rs 10 lakh for education in India and Rs 20 lakh for education overseas. The scheme lets borrowers easing of repayment for the full study period along with 1 year after that which is considered as the moratorium period.
Moreover, loans upto Rs 4 lakh do not need any collateral.
It has been reported that the ratio of bad loans is the most for the biggest lender of the country, State Bank of India.