The demand for education loans grew about 5% in terms of beneficiaries in the first six months of 2015-16 over the corresponding period of the previous financial year, despite government prodding.
Sources said that public sector banks, which are choking with the rise in non performing assets—loans that do not fetch any returns—are wary of giving large ticket loans especially to students studying at non premier institutes.
“We want all deserving students to get education loans but we generally seek substantial data and documents in cases where the loan amount is high or those going abroad,” a senior official at a mid sized public sector bank told Hindustan Times.
The HRD ministry has hiked the annual fees for undergraduate courses in the premier Indian Institutes of Technology. The annual fees will be raised from Rs 90,000 to Rs 2 lakh from the upcoming academic session. However, differently-abled students or those belonging to the scheduled tribes and scheduled castes will not be impacted by this increase. “We are absolutely open to give loans to IIT students in case they seek after the hike in fees,” the official said.
Earlier, Reserve Bank of India (RBI) governor Raghuram Rajan said that banks must create flexible repayment structure for education loans. Banks are also looking at the possibility of providing the options of different and flexible repayment structure to students --who have takenloans-- based on their employment and salary patterns.