NEWS & ADVICE : EDUCATION LOANS
Education loans: Cause of concern amongst lenders
By Neelima Shankar
Nov 3, 2009
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As, requested by banks, the Union finance Ministry would now consider a scheme to insure education loans.

After a meeting between bank heads and Finance minister Pranab Mukherjee, a banker said, "The ministry will work out a note and the Indian Banks Association will then take this forward."

Banks that had been providing the loans for the last two years are worried as there still are no prominent signs of recovery in the job market. In the meeting, some banks expressed concerns regarding the loans and said that a formal scheme to insure such loans must be put in place.

Several banks fear that without a formal scheme to insure such loans, there might be a rise in non performing assets arising out of these.

The biggest fear for the banks is loans availed by students studying abroad. A banker said, "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 guarantee and goes away."

Bankers say that if such a scheme is introduced it would help them to improve lending to the sector.

Recently, The Gandhian youth for Peace Trust and Rural development has launched a helpline on education loans to help students have an easy access to information on loan and higher studies. This is to assist students in corporation schools in Chennai who are not aware how to approach a bank for education loan.

 


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