PSBs will recover education loans.

schoolings will recover education loans.

    Public sector banks (PSB) are rolling out several initiatives to recover legacy non-performing assets (NPAs) in education loans. The options include one one-tenement (OTS) or the sale of bad loans to asset reconstruction companies (ARCs). They are also looking at newer loan products as demand for higher education loans is rising. 

      Indian Overseas Bank, had fresh slippage of Rs 300 crore during the quarter that ended September on account of education losoldlling these bad loans to ARCs in an attempt to get them out of the balance sheet. IOB MD & CEO Partha Pratima Sengupta said that OTS for education loans has been launched recently. He added that ARCs were also showing interest and negotiations were going on. These were legacy loans that remained unpaid for seven to eight years.

     Another leading PSB, Indian Bank has around 3.7% of its gross NPAs in the education loans bracket. Of the total Rs 32,000 crore of gross NPAs, Rs 1,183 crore fell under the category of education loans. During a recent interaction with the media in Chennai, Indian Bank MD & CEO S L Jain said, Of course, education loans in our NPAs are more. But what we have done is we have revived our education loans scheme and we are giving competitive rates to all whether it is IITs, IIMs, top engine or entering and management schools.

   According to a senior banker, hard loans are higher in the sub-Rs 4 lakh category which is the anise nature of u secured loans. However, among these too, awareness of credit scores is encouraging borrowers to come forward for a settlement. 

  All India Bank Employees Association general secretary  C H Vennkatachalam said several students who had availed education loans are struggling to repay because they are either unemployed or underemployed. Wilful default will be very negligible. So, the government must take a lenient view on education loans that have become NPAs and subsidies or pay the interest, such that banks will not turn them into bad loans. Selling to ARCs will lead to pressurizing the students and parents, he added.