Study loan takes a hit amid sluggish economy

Slowdown in the economy and visa restrictions by various countries is casting its shadows on disbursal of educational loans in Haryana and Punjab.

According to a data compiled by the State Level Banker’s committee (SLBC), the education loan segement in Haryana registered a marginal increase of Rs 7.97 crore from Rs 931.75 crore in June 2011 to Rs 939.72 crore in June 2012, thus showing a year-on-year growth of 0.86 per cent. The same was 17 per cent during the corresponding period of previous year. The total disbursal during the period (June 2010-June 2011) was Rs 137.66 crore.

Officials familiar with the matter said that the dissapointing growth figures were due to a variation in data reported by one of the bank. Besides this, there were several factors which are responsible for low offtake of education loans, bankers mentioned. One of the banker mentioned, “Slowdown in the economy is one of the factor behind low disbursal of education loans. There are lot of seats lying vacant in many of the colleges and Universities. Secondly, due to restrictions on visas by countries such as Australia, England, USA among others, very few students opted for overseas studies. These are the main factor behind low offtake of loans.”

 

As far as Punjab is concerned, the advances under education loan schemes compared to Haryana was slightly better and witnessed single digit growth. The banks in Punjab have witnessed an increase of Rs 97.55 crore from Rs 1,108.54 crore in June 2011 to Rs 1,206.09 crore in June 2012, a growth of 8.79 per cent over the corresponding period of previous year.

Bankers say that the growth in education loan disbursals has slowed, owning to the high base effect and few students opting for foreign education. There has been a reduction in the number of students going to Australia for higher education. Also, on the whole, there may be a fall in the number of people seeking loans to study overseas. Some banker also said the number of students planning to go abroad for higher education might be on a decline, which might have led to the reduced growth rate of loan disbursals.

Besides, high interest rates which were prevailing last year, may have led to people using their own savings, rather than taking education loans. Also, last year, rupee depreciated against dollar in a never before manner, making foreign education more expensive, which might resulted in offtake of education loans further.

Keeping in view the requirement of financial support to the meritorious students who wish to study further and also the importance of education being attached by Haryana and Punjab government, all banks were requested to improve the performance under education loan scheme,during the SLBC meet.