Yes, this is latest news from the education loan section from banks across India. The reason for this decision are many, but valid. Banks do not ask for any collateral security for education loans under Rs4Lakh. And with the increase in the number of bad debts cases within this loan range has raised concerns with the banking authorities.
Apart from judging the loan applicant’s educational excellence and record and whether or not it is affiliated to their respective governments, the banks want to assess the placement and packages record of the desired institutions so that, the repayment plan of the student can be assessed.
“It’s up to the sanctioning officer to take additional measures if he’s not convinced with the application. However, due care is taken not to unnecessary harass the student,” said an Indian Bank official. Having a life insurance policy along with the loan, be it even a personal loan, seems to throw some light of hope, since it is the student who is paying the premiums. If incase, the student is unable to repay the loan amount then, he can surrender the policy value. However, the value of the policy is low, but it is something better than nothing kind of a situation.
Generally, the banks offer students a moratorium period of 6 months, wherein the student, once seeked employment, can repay the bank within this stipulated 6 months. However, due to lacks of jobs and unemployment structure, most loans have turned out to be bad debts.