The conditions set by the Indian Banks Association for disbursing education loans were not approved by the Reserve Bank or the Union government
A special committee will be formed to evaluate complaints on education loans on a weekly basis. This decision was taken at the high level committee meeting held at the Collectorate on Saturday.
Suggestions to unify the rates of interest levied on education loans by different banks and initiating steps to bring in clarity in procedures were also raised at the meeting.
The high level committee meeting featuring MPs, MLAs, and bank managers in the district was convened by the special cell formed under the District Planning Office. P.I. Sheikh Pareed, District Collector, presided.
The meeting suggested that students securing admission in management quota should not be denied loans. The condition that students securing admission through the Common Admission Test being eligible for loans should be extended to those securing admission in management quota as well, it was suggested.
The conditions set by the Indian Banks Association for disbursing education loans were not approved by the Reserve Bank or the Union government, said P.T. Thomas, MP, adding that the IBA has brought out the conditions on the basis of suggestions given by principals and bank managers of the metro cities. Bank managers should take a liberal attitude towards ordinary students, he said.
Elected representatives and District Collectors get many complaints regarding education loans. This included complaints like banks fixing conditions arbitrarily, denying loans to more than one person in a family, refusing to top up the loan for higher studies and violating moratorium conditions on interest. Instances of denying loans after applicants from the rural sector failed to produce the PAN card and passport have also been brought to the notice, Mr. Thomas said.
The attitude of banks towards common man should change, said P. Rajiv, MP. While banks think of how to deny education loans, it should be noted that majority of the non-performing assets of banks were loans issued to corporate clients and big players. Education and agricultural loans do not feature in this section. All the agricultural loans written off were of nominal amounts, he said.
Bank managers should have more social commitment, said Anwar Sadath, MLA. Most of the banks ignore the direction that security and margin money should not be collected for loans less than Rs. 4 lakh, said V.P. Sajeendran, MLA.
One of the major issues faced by banks was defaulting of the repayment of education loans, said Jayaprakash, lead bank manager. Banks also find it difficult to give loans for students securing admissions in institutions that do not have quality, as many of these institutions charge unrealistic fees. It should also be suspected that there were deliberate efforts to default repayment, he said.
Mayink Gupta, deputy general manager, Union Bank; A.D. Joseph of Reserve Bank and Venu Menon of NABARD, spoke.