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Job market squeeze: Education loan defaults rise 30% in Uttar Pradesh

The NPAs during 2014-15, 2015-16 and 2016-17 stood at Rs 1.42 bn, Rs 2.25 bn and Rs 2.51 bn respectively

Virendra Singh Rawat  |  Lucknow 

students, graduates, b-school graduates, IIT, education, college

The domestic squeeze has started to hit the loan portfolio of commercial banks with defaults in this priority lending segment in registering almost 30 percent rise in the first six months (Apr-Sep) of the current fiscal 2017-18.

Against the (NPA) in the loan space of UP standing at 7.63 per cent at the end of March 2017, the NPAs have already clocked 9.92 per cent during the first two quarters of 2017-18, thus soaring by almost 30 per cent.

In value terms, NPAs which stood at Rs 2.51 billion at the end of March 2017 have already notched up Rs 2.16 billion at the end of September 2017, against total loan outstanding of Rs 21.81 billion so far.

Over the last three years, loan NPAs have been rising consistently with bad debts in the segment standing at 4.36 per cent, 6.96 per cent and 7.63 per cent at the end of March 2015, March 2016 and March 2017 respectively.

Interestingly, while the loan outstanding have largely remained stagnant, the level of NPAs have been increasing indicating defaults in servicing of loan by beneficiaries either due to their failure to land jobs for repayment of wilful defaults.

The NPAs during 2014-15, 2015-16 and 2016-17 stood at Rs 1.42 billion, Rs 2.25 billion and Rs 2.51 billion respectively. Likewise, the total number of distressed accounts has also increased over the last three years from 6,495 during 2014-15 to 10,721 at the end of March 2017. At the end of September 2017, the number of accounts in the loan space had already climbed to 9,520.

Pan-India, the loan defaults reported by commercial banks had grown by over 45 per cent from March 2016 to March 2017. According to the union finance ministry’s submission in Parliament last month, loan bad debt soared from Rs 35.36 billion at the end of March 2016 to Rs 51.92 billion at on March 31, 2017.

Five state-owned lenders, including and Indian Bank, had even reported doubling of their distressed loan portfolios during the period.

Acknowledging the distress, the Centre has reportedly decided to tweak the loan scheme to better cater the needs of the students. The proposals include repayment holiday or moratorium of course period plus another year, additional moratorium during unemployment or under-employment and extension of the repayment period to 15 years to pare the equated monthly amount.

First Published: Mon, January 15 2018. 16:14 IST
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