Will Central govt ensure that ambiguities and anomalies in sanction of educational loans by banks are removed?Question in yahoo India please. A news report from Sirkali (TN state) had revealed the tragic gaps in the release of educational loans by banks. The predominantly agricultural area has a large number of poor families whose children could not access higher education due to poverty, though they get good marks in... | |
First of all the so called Education loan for higher / professional education is not a wholistic scheme to benefit poor people (?) with any common guidelines from RBI or Govt, but a scheme evidently started to satisfy the govt., with each bank having its own restrictive guidelines, which I shall briefly outline here:
Eligibility:
State Bank of India: Indian national who had secured an admission in a technical / professional course in India / abroad.
Andhra Bank has a further stipulation: "with 1st class marks in previous exams and selected for professional course"!
Indian Bank: Approved courses: Computer Courses:Part-time/Full-time in Institutes approved by Government of India (Department of Electronics). Duration of the course: Minimum - 12 months Maximum - 48 months.
Amount of loan:
state Bank: ''Need based'' finance ''subject to the repaying capacity'' of the parents/ students with margin (quotes intended) and the following ceilings:
* studies in India - Maximum Rs.7.50 lacs
* studies Abroad - Maximum Rs.15 lacs
Andhra Bank: Maximum Amount for India : Rs 100000
Maximum Amount Overseas : Rs 500000
Indian Bank: Amount of loan
For Computer Courses: Maximum : Rs.1.00 lac
For other professional courses:Maximum : Rs.3.50 lacs
Margin:
state bank of India: Margin: Upto Rs.4 lacs: No margin; Above Rs.4 lacs:
* Studies in India: 5%* Studies Abroad: 15%
Indian Bank: Margin: Upto Rs.2.00 lacs : 10%
Upto Rs.3.50 lacs : 15% (India); Margin: Upto Rs.5.00 lacs : 15%Above Rs.5.00 lacs : 25% (Foreign)
Andhra Bank: not mentioned.
Collateral security: Only Andhra Bank (of the above three) wants it. (I have just taken three banks and not studied terms of all banks in the website)
Interest rates: 12% upto Rs 4 lakhs in SBI and Andhra banks and 13% above 4 lakhs in SBI, while it is 13.5% in Andhra Bank.
In Indian Bank, it is 12% upto Rs 2 lakh only and 13.5 above that limit.
Thus, the eligibility, credit limits, norms for sanction etc vary even within the few - three - banks studied briefly. There may be conditions not mentioned in the site. There may be changes not made in website.
The former Finance Minister Chidambaram was telling that the banks have been told to not ask for collateral security etc. But many banks have limited the scope for financing to study in IIMs, IT Courses, etc, that too for ones offered in some elite institutions!
At micro levels, as in the news item mentioned by you, we know how it is hard for poor people to access bank loans. For example, please see the proviso of SBI ''Need based finance subject to the repaying capacity of the parents/ students..."!
It is like the oxymoron shared in NCC camps, about the impossible command: ''stand according to height, in alphabetical order!" Like that, how can the loan be ''need based'' and also fall within the ''repaying capacity'' of the poor!
So bankers are bankers and they would not be liberal with the depositor's money at their disposal, for which they may have to ensure proper timely collections! They would rather lose crores from trade community and write off bad loans, but hesitate to the core about sanctions for the poor!
I beg to be excused by the exceptional few Managers who do dedicate to this cause of poor's educational support here and there. But by and large people are very narrow minded only ! As for govts interceding in the anomalies, had any MLA / MP ever raised the issue in the legislative / parliamentary forums? The poor do not have any genuine spokesmen for them. The parties make false claims about their commitment to help Aam Aadmi. So I doubt the scope of any meaningful intervention.
The Education loans, the guarantee for food or employment, the woman quota, the Garibi hatao (drive povery) etc are all just political slogans. Some of them have come to execution like Education loan. Banks won't take govt seriously since they have the collection problem towhich the Managers would be accountable to the Managements!
Just like the write off of Agrl loans from banks and cooperatives which does not solve the problem of indebtedness of farmers, most relief / welfare programmes are half hearted, half baked programmes only. Instead of eradicating the poverty of farmers by ensuring better price for their produce, which the agents of trade deny them, while hiking the price at consumer end, the problem can not be solved. The write off of institutional loans would not drive the poverty of the families that lost all investment in a price fall! Furthe money lenders are the greatest lenders of farm loans. Banks and Coops have not given further loans to many farmers who failed to pay in the past and enjoyed the write off!
Like that the education loan is presently enjoyed only by middle and upper mid class families only and not by the poor. The bankers care to extend help only based on credit worthiness, as pointed out by Mr Dilli sir.
