NPA’s rising in education loans

Education loans have started bleeding the banking sector with the default in repayment rising to 7.67 per cent of the outstanding amount at March- end, 2017 from 5.7 per cent 2 years ago.

As per the data compiled by the Indian Banks Association, the total outstanding education loan at end of the fiscal 2016-17 was Rs 67,678.5 crore, of which Rs 5,191.72 crore was NPA.

The government is already struggling to deal with the problem of mounting NPA in the public sector banks and has drawn a mega recapitalisation plan to strengthen them.

The IBA data revealed that the non-performing asset (NPA) in the segment in percentage of the total loan has been constantly increasing.

The NPA was 5.7 per cent in 2014-15, which rose to 7.3 per cent in the following fiscal and further to 7.67 per cent in the last financial year.

The government had earlier modified the IBAs Model Education Loan Scheme with a view to reduce the incidence of NPAs in the segment.