Education loan segment is increasingly becoming a matter of concern for public sector lenders. They have moved towards taking cautious steps while dealing with this segment owing to the fact that many of their grants in the sector are now on the road to turning dicey.

The exposure of banks in the segment has also been on the rise due to lesser repayments taking place. Also the repayment tenor of education loans being large coupled with one year of moratorium period, leads to increased payment cycle.

Banks have admitted that even they have not been very enthusiastic these days in lending to this sector as they used to be some time back.

"Our estimates are that 10-15 per cent of the outstanding loans to the sector may have turned bad, with the bulk of it in the sub-Rs 4 lakh size," said a top official from a PSB.