NPAs in education sector on the rise

New Delhi, Aug. 12: Bad loans in the education sector have shown a rising trend in the past three fiscals with NPAs nearing 9 per cent of the outstanding by March 2018, according to data.

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, underemployment, 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 per cent in March 2016 to 7.67 per cent in the following year and then jumped to 8.97 per cent in March 2018. The outstanding education loan amount at the end of FY18 was `71,724.65 crore of which `6,434.62 crore was NPA.

In the last financial year, public sector banks disbursed `13,470 crore 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 and Karnataka.

The finance ministry recently informed the 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.