The bank heads met Union finance Minister Pranab Mukherjee and requested him to show concern to a scheme to insure study loans.
After the meeting a banker told, “The ministry will work out a note and the Indian Banks Association will then take this forward”.
In the meeting the bankers while expressing their concern on educational loans said these loans are becoming the matter of big worry for them so they want a scheme should be formalized to insure such loans.
In the past couple of years some of the banks especially the public sector banks were aggressive in giving education loans but now they are feeling heat, as the job market conditions are still not giving any positive indications of recovery.
A number of banks are worried about an increase in non-performing assets from these loans in the near future.
The main fear of banks is loans taken by students for studying abroad. According to a banker, “There is a concern about whether a person taking a loan and going abroad will be traceable tomorrow. Or a person who has taken a loan without any guarantees and goes away”.
Bankers stated if the government implement the insurance cover scheme for educational loans, then it would be easy for banks to improve lending in this sector.
At present on some home loan schemes there is insurance cover. The bankers added, the premium on such cover can be as much as Rs 25,000 a year for a Rs 15 lakh loan.
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