MPs from State to move against IBA decision on education loans

Taking stock: A. Sampath, MP, inaugurating the District-level Review Committee meeting of banks in the city on Tuesday.  

Staff Reporter

Bank official says regulation applies only for nursing course

THIRUVANANTHAPURAM: A. Sampath, MP, said here on Tuesday that people’s representatives from the State would submit a representation to Union Finance Minister Pranab Mukherjee to revoke a decision of the Indian Banks’ Association (IBA) to regulate education loans extended to students in self-financing colleges.

Inaugurating the District-level Review Committee meeting of banks, Mr. Sampath said the issue would be taken up at the next Parliament session.

“There is much difference between the fees charged by the self-financing colleges and the fee structure fixed by the government. I understand that the bankers’ forum has directed the banks to advance loans to students only on the basis of the government fee structure. This will lead to a major issue in the education sector,” he said.

Mr. Sampath said that banks should take a more lenient approach when considering loan applications from meritorious students from economically backward families. The banks should consider concessions in repayment terms at least until the students completed their course.

“Instead of that, if banks start adding up penal interest and compound interest right from the first year of the course, it will become a huge liability to the students by the time they complete their studies. Students today pursue studies in a very stressful environment. The banks should not push them to suicide with their difficult terms,” he said.

Clarifying the stand taken by the Indian Banks’ Association with regard to education loans, V.R. Muralidharan, Lead District Manager, said the regulation applied only for tuition fee of nursing courses and students pursuing other professional courses such as medicine and engineering would not be affected.

District Collector Sanjay Kaul, who chairs the DLRC, said that to avoid confusion, banks must make the beneficiaries aware of the restriction. “If the IBA has taken a position in this issue, the banks should educate loan applicants on that instead of allowing such controversies,” he said.

Credit-deposit ratio

A report published at the meeting said the credit-deposit ratio in the district was 61 per cent. The banks in the district disbursed Rs.851.21 crores as against the target of Rs.3,919.26 crore, registering an achievement of 22 per cent, in the three major heads of the priority sector in the first quarter of the financial year 2009-10. In the agriculture sector, an achievement of 27 per cent had been recorded with a disbursement of Rs.411.31 crore as against a target of Rs.1,546.44 crore.

As much as Rs.406.17 crore was disbursed in the service sector as against a target of Rs.2,107.78 crore, while in the non-farm sector, the disbursement was Rs.33.73 crore.

The bank deposits in the district stood at Rs.24,999 crore and advances, Rs.15,218 crore.

V. Surendran Pillai, MLA; district panchayat president Anavoor Nagappan; K.D. Joseph, Assistant General Manager, Reserve Bank of India; and K.T. Trivicraman, District Development Officer, National Bank for Agriculture and Rural Development, spoke