As higher education costs are rising sharply, taking a loan is becoming a necessity for many students. While banks are comfortable lending to students pursing professional courses in institutes such as IITs, IIMs or even reputed colleges in tier-1 and tier-2 towns, they are reluctant to offer loans to those in general streams or studying in lower rung institutions. Their reluctance is justified, since non-performing assets (NPAs) as a percentage of education loans for state-owned banks stood as high as 9% in FY15. Outstanding loan growth to the sector has slowed down to 5.6% in FY15 from 8.8% in FY14. As a result, the number of loan disbursements has dropped over 60% between FY10 and FY15, with banks focusing largely on loans of higher ticket sizes of R10-lakh plus.
To make the process easier for students, however, the ministry of finance, HRD and Indian Banks’ Association have jointly launched a portal Vidyalakshmi.co.in. Students can apply at one place and track the status of the loan application. At present, they have to apply to multiple banks for loans as each bank has separate criteria for approval, based on courses, grades, job prospects and so on. The biggest advantage of the portal is that the application will be tracked by all the banks registered. If the application is pending for additional documents, the portal will reflect that too. The website also has a link to the National Scholarship Portal for information related to government scholarships. The portal obviously can help reduce the turnaround time for processing of applications. For banks, the process will be transparent and will cut the discretionary power of the bank manager to sanction loans. This surely can be a win-win exercise, if it clicks.
