Super achievement | Business Line

Super achievement | Business Line

Please read my letter under "Big price loans"

Submitted version copied below:

‘Dis’-credit
to education

This refers to
the report “Failure to repay an education loan may cost you dearly”(July 30). The
report brings out in one place the background in which education loan, as a
category of bank credit, has come to the present disgraceful position. The
government policy, banks’ attempt to ‘pluck low hanging fruits’ to meet
priority sector targets, greed of educational institutions to earn more by
linking cost of seats in professional colleges to loan eligibility, failure to
popularise a reasonably acceptable level of repayment ethics at least among the
‘educated’ poor law enforcement and above all a sense of ‘pride’ created in the
minds of high profile defaulters have all contributed to the present impasse.

The position can be retrieved by:

i)              
First ensuring that those beneficiaries who are now
defaulters and have the repaying capacity repay the loans without delay. Those
who have borrowed in ‘lakhs’ and are employed within the country or abroad and
whose loans have become NPAs on books should be targeted first. Banks should be
‘directed’ to share such information with credit information agencies and the
educational institutions should be asked to publish such names in their
publications.

ii)             
Requiring the new generation private sector banks to
diversify their priority sector advances. There is a bias towards educational
loans for professional courses, car loans and housing finance.

iii)           
Providing incentives for timely repayment. Even public
recognition of prompt repayment in banks’ interaction with public will help.

iv)           
Ensuring that support from proposed Education Credit
Guarantee Fund does not go to wilful defaulters.

 M G Warrier, Mumbai