Banks decline in granting student loans

Only six percent distribution in the state, four percent in Aurangabad


Aurangabad, September 14:

With many people lining up for student loans for higher education, only Rs 606 crore has been disbursed so far out of the target of Rs 10,279 crore this year by state banks . This amount is only six percent. So far, Rs 161 crore has been disbursed in Aurangabad district to 500 beneficiaries.

A total of 19,749 students in the state received education loans even though the loan distribution target was 2.66 lakh recipients. In Aurangabad, this ratio is only four percent. According to senior sources, banks have been asked to increase the disbursement of student loans within 15-30 days and loans up to Rs 7.5 lakh should not be rejected on frivolous grounds such as the CIBIL scores, the ineligibility of the courses and the search for a collateral guarantee. Banks have also been asked to provide guidance to applicants for student loans under the Central Sector Interest Subsidy Scheme for students whose annual household income does not exceed Rs 4.5 lakh. However, members of the banking syndicate say this will put pressure on banks as non-performing assets (NPA) in education loans continue to rise due to arrears of small loans up to Rs 7.5 lakh. Giving more insight, Sundar Pagote, a member of All India Bank of Maharashtra Employees Federation, said that it is difficult for new graduates to find employment immediately after completing the course. Banks have introduced guarantees in the event of payment default. Until June 30, 2022, banks in the district have distributed education loans worth Rs 161 crore to 500 students. That’s only four percent of the goal. However, 8% of education loans disbursed by PSBs turned into NPAs. Of the Rs 200,000,000 in student loans disbursed, Rs 60,000,000 was not repaid.

Huge difference in interest charged

More than 15,000 new borrowers had applied for student loans between January and August in the district. Interest rates in public banks are 8.5% to 10.5%. The interest rate in private banks and finance companies is between 13 and 17%.

Unpaid dues of Rs 8587 crore

According to sources, so far, 1.72 lakh of education loan accounts in the state have unpaid dues of Rs 8,587 crore. Of this, 15,938 accounts have unpaid dues of Rs 358 crore.

Who can apply and required documents

A student can avail the loan with parents or guardian taken as co-applicants. Banks offer education loans for graduation, PG, diploma or vocational courses. Banks require documents such as an admission or acceptance letter from the institution, tuition fee structure, class X, XII and graduation grade sheets (if applicable). Applicants’ income documents, including bank statements, payslips, and tax returns, are also required. A loan pre-admission sanction can be used for the purpose of applying to overseas universities.

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