India

Indian banks witness 142 per cent hike in bad education loans

New Delhi, July 17: Indian banks have witnessed a 142 per cent hike in default by students during the past few years, who failed to recover their education loans.

This report comes at a time when numbers of software companies are laying off employees and hiring for new jobs has slowed down.

However, private banks are least impacted but State-owned banks are worst hit, as they account for over 90 per cent of educational loans.

The Reserve Bank of India (RBI) has revealed in RTI filed by the Indian Express that  in the education sector, the total non-performing assets (NPAs), or loans on which borrowers have defaulted on payments for more than the stipulated 90 days, stood at Rs 6,336 crore at the end of December 2016, which was at Rs 2,615 crore in March 2013.

There is 8.76 per cent of the total education loan outstandings of Rs 72,336 crore as of December 2016, against Rs 48,382 crore in March 2013, the central bank added.

According to the report, the hike in bad education loans have been observed mainly in the span of three years i.e.  2013-2016, coincided with the Indian industry combatting overcapacity, demand slowdown, stalling of new projects and defaults by top corporates.

It also revealed more than half of education loans were taken by students belonging to southern states, including Tamil Nadu and Kerala.

Besides this,  the demand for educational loans also increased as educational institutions, especially management and engineering colleges, developed rapidly.

Major problem state owned banks witnessed that students take loans but somehow they failed to get an aspiring job due to several reasons in their field which in result they couldn’t able to recover their educational loan in an estimated time.

Wefornews Bureau 

 

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