NEWS & ADVICE : EDUCATION LOANS
Banks might reconsider lending to 'management quota' students
By Neelima Shankar
Aug 28, 2012
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Banks might reconsider their stance of not sanctioning loans of students who got admissions under the management quota. This comes after the meeting of bank chiefs with Finance Minister P. Chidambaram on August 18.

Due to rise in non-performing assets (NPA) in the education loans segment, the banks became more conservative in sanctioning loans. Students who got admission under the management quota were offered personal loans instead of education loans.

However, Mr. Chidambaram believes that every student has a right to education, and banks can not deny credit to any student who meets the parameters. Banks on the other hand feel that student which gets admission under the management quota is not 'meritorious' and hence the bank offer personal loans in place of low cost education loan.

Mr. Chidambaram strongly said, even if the student is taking an admission through management quota, that does not mean he/she is no merit. Mr. Chidambaram was highly influential in making education loans scheme a hit during his earlier tenure as FinMin.

As per the recent estimates, the total education loan portfolio stands at Rs. 49,069 crore out of which 5% is NPA. Earlier, banks' request for special mechanism for recast of study loan was rejected by RBI.


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