Kerala’s bad loans in the education sector shoot up

KOCHI: People misusing the government’s education loan repayment support scheme by deliberately defaulting? The State Level Bankers’ Committee (SLBC), Kerala, seems to think so.When the Education Loan Repayment Support (ELRS) scheme was announced in April 2017, the non-performing assets (NPA) under the education loan in the state was 10 per cent.

More than a year later, it has shot up to 17 per cent.

What is worse for the banking sector, there is a 35 per cent growth in education NPA in the current financial year itself.

Kerala launched a Rs 900-crore ELRS scheme to help students from families with annual income below Rs 6 lakh repay their education loans.The SLBC meeting minutes, a copy of which is with Express, said the “forum raised concern on the sharp rise in NPAs in education loans after the ELRS scheme was notified in the state”.

The state’s education loan, which stood at Rs 9,821 crore in December 2015, rose to Rs 10,220 crore in December 2016 and touched Rs 10,179 crore in December 2017. The NPAs in the education loan segment rose from Rs 1,021 crore in December 2015 to Rs 1,315 in December 2016 and further to Rs 1,777 crore in December 2017, which is 17 per cent of the total loan amount.

Message loud and clear: Bankers’ committee

“The message is loud and clear,” the SLBC minutes said, suggesting that students may be deliberately defaulting to take advantage of the government’s loan waiver scheme.SLBC Kerala convenor G K Maya, who is also the general manager of Canara Bank, said Rs 33.48 crore of claims have been forwarded by the nodal officer pertaining to all the banks, of which Rs 24.09 crore have been forwarded by the SLBC.

“The Finance Department, after scrutinising the claim application on a test basis, has approved Rs 31 lakh and it’s expected to be passed on to SLBC/banks,” she said.A Federal Bank officer attributed the rise in NPAs to the misconception among the public that the government or banks will come with one scheme or the other in the future to write off their loans. “Though the Kerala government introduced the scheme with good intentions, the public has not taken it in the right way. This has put bankers under pressure and we will be extra cautious while sanctioning student loans,” he said.