The Hindu : Front Page : Private banks shun education loans

Online edition of India's National Newspaper
Wednesday, Oct 19, 2005

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Private banks shun education loans

P. Venugopal

SLBC gets cold response from such banks

THIRUVANANTHAPURAM: New generation private banks see little premium in helping students with education loans.

Data presented at the latest meeting of the State Level Bankers' Committee (SLBC) show that the public sector banks helped 65,422 students with loans totalling Rs.797.15 crores during the last three years till June 2005.

The private banks, on the other hand, helped only 6,715 students with loans to the tune of Rs.77.77 crores. Several banks such as IDBI Bank, Centurion Bank, Indus Ind Bank, HDFC Bank and Bank of Rajastan did not disburse even a single education loan.

Among the foreign banks having branches in the State, StanChart Grindlays and Oman International Bank also shied away from this retail lending segment.

Chief Minister Oommen Chandy had called the banks for a meeting in August to discuss ways to make education loans available to all the needy students. One of the problems identified at this meeting was the reluctance of some of the private banks to chip in.

Though the convener of the SLBC had written to all the reluctant banks, none of them, except the IDBI Bank, even cared to reply. The IDBI Bank informed the SLBC that its branches in the State were yet to venture into the retail lending business. It said it would take up the proposal for disbursing education loans as soon as it got into retail lending business.

The SLBC finds that many banks that give education loans follow different norms for deciding eligibility, although the directions of the Union Government on this subject are quite clear.

From Idukki district, the SLBC has received complaints about some banks refusing to help students joining general nursing course. The service area concept is not in vogue in the State at the moment. Therefore, the banks that show willingness to help the students are flooded with applications. for education loans even from far-away places. This is causing the students and also the favourably disposed banks quite a bit of inconvenience.

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