Rising level of non performing assets (NPAs) in the education loan segment has forced banks to adopt strict measures in putting check to the loopholes existent in the system and also keep a track of the students.

"We need to assess the repayment capacity of the borrower, which comprises two components - of the parent and of the student himself after he gets employed, which depends upon the course he has selected, the employment potential of the course and the track record of the institution as far as placement is concerned," Mr H.S. Upendra Kamath, Executive Director, Canara Bank said.

The end of the first quarter of this fiscal has shown the education loan portfolio at Rs 2,976 crore which covered 1.71 lakh students. NPAs in this segment have shown a significant rise in one year time by as much as 85%.

"These factors will hereafter play a major role in sanctioning educational loans, particularly loans up to Rs 4 lakh where there is no security involved," he said.

"Going forward, we hope that recovery in educational loans will also improve," said Mr Kamath.

Canara Bank has intensified its monitoring mechanism, since "not all overdues arise from genuine problems," he added. "Current whereabouts of students are to be ascertained with help from colleges and parents"; and wherever these efforts do not yield results, appropriate action would be taken, he pointed out.