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NPAs in education sector rise to 9%

Published: Aug 13, 2018

By TIOLCORPLAWS News Service

NEW DELHI, AUG 13, 2018: According to an official data, Bad loans in the education sector have shown a rising trend in the past three financial years with NPAs nearing 9 % of the outstanding by March 2018.

While disbursing the loans, banks follow the Indian Banks Association's (IBA) model education loan scheme, which provides for repayment period of up to 15 years. Under the scheme, there is a provision for one year moratorium on repayment after completion of studies. Besides, there is moratorium on repayment on account of spells of unemployment, under-employment, 2-3 times during the life cycle of the loan period.

As per the IBA data, the percentage of NPA to outstanding education loan rose from 7.3 % in March 2016 to 7.67 % in the following year and then jumped to 8.97 % in March 2018.

The outstanding education loan amount at the end of 2017-18 was Rs 71,724.65 cr of which Rs 6,434.62 cr was NPA. In the last FY, public sector banks (PSBs) disbursed Rs 13,470 cr loan to 7.86 lakh students.

As per another set of data, 1.5 lakh students from Tamil Nadu availed education loan last year followed by Kerala (99,314) and Karnataka (90,630).

The finance ministry recently informed Parliament that in order to facilitate easy processing and disbursal of loans, Vidya Lakshmi Portal was launched where students can view, apply and track their education loan application. PSBs' share in total lending by banks to education sector is about 91.5 %.

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