Indian Bank and Indian Overseas Bank together owed ₹1,211.74 crore, according to govt. data

Tamil Nadu accounts for over 40% of non-performing assets (NPAs) in education loans given by public sector banks.

According to data given by the Indian Banks’ Association (IBA) and presented in Parliament, public sector banks had NPAs totalling ₹2,659 crore across 1,71,774 education loan accounts in the State, as on September 30, 2017.

The data said that two Chennai-headquartered public sector banks — Indian Bank and Indian Overseas Bank — alone had NPAs of ₹1,211.74 crore in education loans.

While Indian Bank had NPAs of ₹687.10 crore across 37,400 accounts, Indian Overseas Bank had NPAs of ₹524.64 crore across 38,117 accounts. The bad loans for State Bank of India were at ₹1,550.58 crore across 67,215 education loan accounts.

Overall, the NPAs for educational loans was at ₹6,356 crore across 3,45,340 accounts.

The data was presented by Shiv Pratap Shukla, Minister of State for Finance, in reply to a question on education loans in the Lok Sabha. He also said that 25,17,038 students had benefited from the Central Sector Interest Subsidy Scheme (CSIS) launched in 2009 by the Ministry of Human Resources Development. The scheme provides full interest subsidy during the moratorium period on education loans up to ₹7.5 lakh, based on eligbility.

In Tamil Nadu, education loans to the tune of ₹1,932.82 crore were disbursed in 2017-18, compared to ₹1,832.24 crore in 2016-17, according to data from the Reserve Bank of India presented with the reply.

According to K. Srinivasan, Convenor, Education Loan Task Force, there are a slew of factors that have contributed to high NPAs in Tamil Nadu for education loans.

“Education loans are treated similar to commercial loans and if there are three continuous defaults, they are declared as NPAs. Education loans need a different treatment since they involve the futures of students and are an investment,” he said.

Mr. Srinivasan also pointed out that banks do not claim the full benefits under the interest subsidy scheme, which puts a burden on the student, and do not grant them their eligible moratorium.

“For instance, there is a one-year moratorium after completion of education, post which the repayment starts. Banks can also provide a six-month moratorium three times during the tenure of the loan for situations like loss of job or health issues. Banks lack awareness on education loans,” he said.

Besides, promises by political parties to waive education loans is also leading to wilful defaults, he noted.