Banks asked not to display names of education loan defaulters

Banks in Punjab were today asked not to display names and photographs of education loan defaulters.
Quoting a communication of Department of Financial Services, Ministry of Finance, bank official in a State Level Bankers Committee (SLBC) meeting said that some banks were adopting "reprehensible practices" such as displaying names and photographs of students who are not able to pay education loans or where there is a delay in repayment.
"This practice is highly objectionable as it tends to stagnate students in addition to completely demoralising him while completely ignoring his circumstances. Such practices need to be completely stopped with immediate effect," said an official here today.

Bank officials informed that a practice has been observed that a few banks pasted the photographs and names of education loan defaulters outside their bank branches.
In Punjab, outstanding education loan as on December 31, 2013 stood at Rs 1,065.09 crore and out which Rs 35.39 crore had become Non Performing Assets (NPA) which was worked out at 3.32 per cent.
Quoting the official communique, officials said that suitable instructions should be immediately passed on to all branch managers, saying that while banks were free to take non-coercive methods for recovery of their dues but practices such as displaying names and photographs of defaulting students be stopped forthwith.

"Any violations henceforth will be viewed seriously," it said.
IBA guidelines say that banks should contact college or universities to obtain progress report on student at regular intervals in respect of those who have availed loans. "There should be an annual review of asset quality of educational loans between banks and educational institutions," letter said.