Education loan-takers form association to battle banks' stonewalling

K.P.M. Basheer

KOCHI: In a State known for a surfeit of associations, Education Loan Holders Action Committee (ELHAC) may sound like yet another organisation with an axe to grind.

But, for its members, getting together is essential to salvage their education. The action committee was formed early this month to highlight the woes of students who have taken bank loans to study. Their aim is also to challenge the ‘harassment' meted out by banks.

“Our nationalised banks are notoriously reluctant to advance education loans and once the loan is given they refuse to pass on the benefits the government has announced for encouraging students to pursue higher education,” complains Richard Verghese, State president of ELHAC. “The Union Finance Minister had announced Rs.1,100-crore worth interest subsidy for education loan-takers, but to my knowledge no bank has passed on this benefit to the customers,” he said.

Many of the students, and their parents, have horror stories to tell — from dozens of visits to the banks to get the loan sanctioned weathering stonewalling by bank staff to property attachment threats.

Bankers reluctantly agree that they are not very enthusiastic about education loans as repayment is tardy. Though collateral security is not necessary for loans up to Rs.4 lakh, many banks insist on such security in order to get the loans repaid on time. The loan is usually given jointly to the student and a parent and, when the loan is not repaid, revenue recovery steps have to be taken, a bank manager said.

The loan has to be paid back in instalments a year after the student completes his/her course or six months from the date of landing a job, whichever is earlier. One of the demands of ELHAC is that this ‘moratorium period' should be two years as most of the professionals get only a paltry sum as stipend in the first two years and hence they would not be able to repay the loan.

Mr. Verghese pointed out that in the State, education loans are mostly taken for pursuing B.Tech. and B.Sc. (Nursing). Since nurses get very low stipend/salary in the initial years, they find it difficult to start repayment soon after landing a job.

A Union Bank of India officer noted that though the Centre had announced interest rebate for those whose annual family income is under Rs.4.5 lakh, the banks were yet to get any directive on this. “Students mistakenly think that we are holding back the benefit due to them,” he said.

“The Reserve Bank of India (RBI) has to send the directive to the banks' head offices which will issue instructions to us,” he said.

ELHAC is planning to stage a dharna and fast in front of the offices of the RBI to get the government guidelines on education loans implemented. It will soon send memorandums, with the endorsement of all the MPs from the State, to the Union Finance Minister asking him to further liberalise education loan norms.

The action committee was formed on March 1 at a meeting at Muvattupuzha.