Bad loans in education increased from Rs 60 crore at the end of September 2017 to Rs 148 crore in December
Bad loans in education sector rose unprecedentedly by 2.47 times to Rs148 crore at the end of quarter ending December 2017, as compared to previous quarter. Lack of new jobs is one of the major reasons for non-payment of installments, say experts.
According to a report by State Level Bankers Committee (SLBC) for the quarter ending December 2017, the outstanding loans at the end of the quarter stood at Rs2,135 crore, while the bad loans measured in terms of Non Performing Assets (NPA) stood at Rs148 crore, or 6.92% of the total outstanding loans. This is for the first time in recent history that bad loans shot up in multiples.
Since the quarter ending December 2015, the bad loan amount has remained in the range of Rs 36 crore to Rs 48 crore. In percentage terms, it has mostly remained between 1.8% and 2.6%. However, they increased sharply since the July-Sept quarter of fiscal 2017-18. Then they rose to Rs60 crore compared to Rs44 crore in its previous quarter. It crossed the 3% NPA mark as well. However, in the third quarter, it surged to Rs148 crore almost touching 7% NPA mark. Academicians like Manish Shah, vice president of LJ Group of Institutes in Ahmedabad have no clue about the sudden surge in the bad loans. He attributes three possibilities for non-repayment. These include lack of new jobs, willful defaults or even dropouts.
A banker DNA talked to said on the condition of not being identified that there is lack of awareness about the payment of interest component of the loan after the moratorium period. "We have found that people are not aware that interest component needs to be paid regularly. People tend to pay lump sum. Non-repayment may also due to lack of new job creation. We must also recognize that the cost of higher education has risen sharply causing the loan amount to rise accordingly. A significant section of the loan is for overseas education," said the banker.
Academician and economist Hemantkumar Shah said that rising loans in education is a result of the rampant commercialization of education. "This is also an indication that not enough jobs are available for students to be able to repay the loans. This is creating a problem of rising educated unemployed youth in the country" he said.
EXPERT SPEAK
- Academician and economist Hemantkumar Shah said that rising loans in education is a result of the rampant commercialization of education.
- This is creating pro-blem of rising educated unemployed youth in the country, he said.
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A banker DNA talked to said on the condition of not being identified that there is lack of awareness about the payment of interest component of the loan after the moratorium period. "We have found that people are not aware that interest component needs to be paid regularly. People tend to pay lump sum. Non-repayment may also due to lack of new job creation. We must also recognize that the cost of higher education has risen sharply causing the loan amount to rise accordingly. A significant section of the loan is for overseas education," said the banker.
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