According to the industry evaluation it has been noticed that the gross NPAs in educational loan have increased in past few months. Indian Bank reports showed that 5% of the educational loan of the bank accounts for bad loans. The glooming economy of the country has made it harder for the students to find the job, and therefore they are not able to pay the loan payments on time.
Similarly the Indian Overseas bank accounts for the 8% of its educational loans as it bad loans. As per the salary offered to the students they are finding the interest rates charged on the educational loan 12-13% is higher. Chairman of the corporation bank stated that the Bad educational loan is more than double in the third quarter of this year as compared to the last year.
However it has been reported that it seems the situation will improve by the end of this financial year, since the government has promised to pay interest component on loans taken prior to 2009 by a section of borrowers.