Ballooning bad assets from education loans are forcing banks to restructure these loans. And, they want the Reserve Bank of India (RBI) to allow them to classify the restructured loan as a standard asset and not a non-performing one (NPA). The proposal, however, has not found favour with RBI.
Any restructured loan has to be reckoned non-performing, according to the RBI rule. In 2008-09, during the global financial crisis, RBI allowed banks a one-time dispensation in which restructured loans could be considered standard assets. The move was aimed at providing support to genuine borrowers facing a cash flow problem because of the global downturn.
Given the unsecured nature of most study loans, RBI is not comfortable with the idea of a special dispensation here, bankers said.
According to estimates from bankers to the Union finance ministry, NPAs had risen above two per cent of the educational loan portfolio, which is about Rs 40,000 crore, as on March 31. Banks fear this would rise. These loans were an insignificant figure before 2004-05, when a set of more liberal rules gave these a boost.
In the educational loan scheme, it is possible to borrow up to Rs 10 lakh for domestic education and Rs 20 lakh for studying in foreign colleges. Borrowers need not pay during the tenure of the course plus a year after. The repayment period is five to seven years.
In addition, for loans up to Rs 4 lakh, banks cannot ask for any collateral. This particular clause is thought by bankers to have made loans more prone to turn sour.
+1.jpg)
0 comments
Post a Comment