If farmers’ loan waiver was the USP of the Congress in the Hindi heartland during the recent elections, when it comes to Kerala an equally or even more alarming scenario is presented by the education loan sector.
The NPA of education loans in Kerala banking sector is close to Rs 2,000 crore, which is neck and neck with the agriculture loans.
As of September 2018, the NPA of education loans was Rs 1,846 crore of 70,965 accounts. The NPA of agriculture loans of the same period was Rs 1,932 crore of 1.03 lakh accounts. While education loans constitute 15 % of the total NPA of the Kerala banking sector, NPA of agriculture loans is higher just by 1 % at 16 %.
Banking sector sources said that NPA of education loans has skyrocketed by nearly 100 % over the last few years alone. It was Rs 1,038 crore in September 2015, Rs 1,284 crore in 2016, Rs 1,589 crore in 2017 and Rs 1,846 crore in 2018. About 19 % of the total education loan outstanding is NPA.
The outstanding education loans have also been increasing year by year, except last year as the Kerala Government offered an education loan repayment support scheme. The total education loan outstanding as of September 2018 was Rs 9,927 crore, which was slightly less compared to Rs 11,504 crore in 2017. In 2016, it was Rs 10,032 crore and Rs 9,865 crore in 2015. About 70 % of the NPA of education loans was with public sector banks, followed by private commercial banks.
The banks are initiating legal recovery steps against thousands of defaulters and even offering one-time settlement schemes. Even then the NPA could not be brought down. The mushrooming private engineering colleges in Kerala over the last ten years and the grim job scenario were considered to be the reasons for the mounting education loan default.
According to a senior officer with a public sector bank, though the banks assess the repayment capacity of those availing the education loans, political pressure comes in the way even if education loans are denied for genuine reasons. Some private educational institutions also submit inflated fee structure after colluding with the applicants. “We often raise the escalating education loan scenario during the meetings with the government. However, the government has no solution,” said the officer.