KOCHI:The educational loan sector in the state is set for a turbulent time with the State Bank of Travancore (SBT), the leading player in the segment here, handing over a chunk of its student loan non-performing assets (NPAs) to Anil Ambani’s Reliance Asset Reconstruction Company (R-ARC).
The move to hand over loans by students, who are in distress, is in sharp contrast to the banking sector’s failure to recover huge amount of NPAs from corporates such as Vijay Mallya.
According to union leaders, SBT sold Rs 130 crore student loan NPAs for Rs 63 crore to Reliance ARC. As per the deal, Reliance ARC will pay only Rs 9 crore immediately and the remaining Rs 54 crore will be paid to SBT over a period of 15 years. The NPAs are from 8568 student loan accounts of SBT.
“We are against selling SBT’s student loan NPAs to Reliance as it is at a big loss for the bank. If SBT had told their employees to go for a settlement with the student borrowers, they could have collected much more than than the amount agreed for with Reliance,” said C D Joson, general secretary, All Kerala Bank Employees Federation (AKBEF).
According to SLBC data, SBT’s NPAs in education loan scheme stood at Rs 161.43 crore in December 2014. The total outstanding educational loans in the state is Rs 9370 crore from 3.87 lakh borrowers. Out of this, the total NPA is Rs 100 crore from 48,133 students.
SBT top brass was not available for comment.
The deal between SBT and Reliance comes at a time the money promised by the Centre to bail out student borrowers is not implemented even though it was announced in February 2014 by the then Finance Minister P Chidambaram.
“It’s more than 17 months since the Centre announced the moratorium on education loans. As per the proposal, Rs 2,600 crore was to be transferred to Canara Bank.
“However, banks are not passing on the benefits to the student borrowers, a large number of them unemployed even after passing out from their respective courses,” said Dr D Surendranath, state president of Indian Nurses Parents Association (INPA).
Moratorium
As per the scheme, announced by Chidambaram, in the interim budget in February 2014, the moratorium will be applicable for all education loans taken up to March 31, 2009, and outstanding at the close of the 2012-13 fiscal. The student borrowers would have to pay interest from January 1, 2014.
Joson of AKBEF said the banks should go after big defaulters such as Mallya, whose Kingfisher alone owes Rs 7000 crore to the banking sector. “Big corporate names such as Mallya should be declared wilful defaulter, which will allow the banks to seize the company’s and his assets to recover the lost money,” he said.
Mary Thomas, the Ernakulam district secretary of INPA, said banks should consider the students loan cases in a sympathetic way as most of them are in distress. Many students/parents have repaid more than 50 per cent of the amount. “Banks should write off these loans,” she said.