Restructuring the education loans
The Economic Times reports that now there are chances that the education loan applications of the students would be getting favourable responses if the institution in which one is enrolled in carries a good placement record. Looking at these records would help the banks to judge the repayment capacities of the students who are applying for these loans. All this has come up because the banks are going into loses due to their inability to recover such loans in the absence of any collateral.
Though the academic institutions may be government recognized but if they have poor placement records the students are not be able to get a good job and the loans are not repaid in time. All this was told by the senior official of State Bank which is the largest lending bank in India. Banks are unable to ask for a collateral security for loans below Rs 4 Lakhs because of the existing government rules.
Till now the banks have given Rs 34192 crores as educational loans. Bankers regard this as an unsecured lending and now are taking steps which are qualitative in nature. This can include measures like sanctioning loans on the basis of educational records of the students, recognition of course and institution by the government, salary packages offered to the students etc.
Having being apprehensive about the non repayment of the loans one of the public sector banks have asked for insurance cover for the students applying for loans. This is thought to be useful in tracking the student in case of some mishap and would protect the investment of bank also.
Thus banks want to restructure education loans. They are thinking of giving one year relaxation time to the students to repay the loans which is normally six months after the student completes his course.