Kerala leads in availing education loans, Rs 4.5k crore this fiscal
KOCHI: Amid demands to improve the quality of higher education in Kerala, a finance ministry statement presented in parliament has revealed that the state leads the nation in availing education loans. The total value of loans availed by Kerala students from public sector banks (PSBs) has more than tripled in four years.
Experts have observed a rise in the unit value of loans, primarily to accommodate the escalating expenses associated with funding migration and studies abroad. According to the finance ministry statement, the total education loans sanctioned by PSBs in the country for the fiscal year 2023-24 (up to December) amount to Rs 32,960.29 crore with Kerala accounting for a significant share of 13.8%, at Rs 4,545 crore. The data also reveals that the total value of education loans disbursed in the state has surged by 324%, from Rs 1,610.61 crore in FY21 to Rs 5,218.60 crore in FY23.
The increase is also evident in the number of loan accounts, which—at the end of Q3 of FY24 — have risen to 34,398 from 14,971 in FY21. As of the third quarter of the current fiscal, the number of outstanding loan accounts in the state represents almost 9.4% of the total loan accounts nationally, amounting to 3,67,451. On a national scale, the outstanding portfolio under education loans by Indian banks, inclusive of all lending institutions including cooperative societies, saw a growth of 17% to Rs 96,847 crore in FY23 from Rs 82,723 crore in the previous year, as per Reserve Bank of India data.
‘Loan disbursals on the rise in Kerala’
Meanwhile, data from the State Planning Board’s annual economic review reveal that the total number of education loan accounts in the state -- which include public and private sector banks, regional rural banks (RRBs), small finance banks, and cooperative banks -- has dropped to 284,780 in FY23 from a recent high of 3,49,815 in 2019-20.
This reflects a decline of 65,305 loans or 18.6% over the specified period.
According to sources with the State Level Bankers’ Committee of Kerala, the data is skewed because of a one-time settlement scheme that substantially reduced the outstanding loans. The sources added that loan applications and disbursals are increasing in the state and are likely to reach new highs soon.
They noted that non-performing assets in the education loan segment have decreased to 7.25% (as of September 2023) from a recent high of 13.80% in March 2019.
Additionally, the total value of loans outstanding at the end of FY23 stands at Rs 12,897.19 crore, compared to Rs 11,260 crore in FY20 and Rs 9,694 crore in FY18, which points to an increase in the unit value of loans.
A retired banker told TNIE that there is a noticeable decline in students opting for professional courses in the country, accompanied by a surge in students migrating to foreign countries for studies.
“The increase in the unit value of educational loans reflects the higher expenses associated with foreign studies, and this trend is expected to continue in the coming years,” he said.