Education loan NPAs up 84%

AHMEDABAD: Bad loans in the education sector have spiked significantly in just a year’s time.
According to statistics provided by the state level bankers’ committee of Gujarat, gross non-performing assets (NPAs) for education loans stood at Rs 81 crore in the first quarter of financial year 2018-19, which ended in June.
Bad loans in the sector rose 84% against the corresponding quarter of FY 2017-18, when education NPAs stood at Rs 44 crore.Bankers say that challenges in job creation coupled with dented individual incomes, especially in the retail and micro small and medium enterprises (MSME) sectors, have caused repayment defaults.
“Despite the government’s efforts to boost entrepreneurship and employment, the situation is not optimistic, as job creation is a challenge.
Without adequate employment opportunities, loan repayment cycles are delayed,” said a banker on condition of anonymity.
Data from the SLBC indicates that NPAs in education loans in the state are at their highest level in seven years.
According to bankers, education loans are often repaid by parents or guardians who are co-applicants and not always by students themselves.
“The retail sector is extremely stressed at this point. Similarly, movement is slow in the MSME sector as well.
This has had a cascading effect and it has dented individual incomes greatly.
Due to this, education loan repayments have been delayed,” said a top source in SLBC Gujarat.
Education loan advances stood at Rs 1,878 crore in the first quarter of FY 2017-18, which rose to Rs 2,247 crore in the corresponding quarter of FY 2018-19, growing nearly by 20%.
SLBC data reveals that the ratio of NPAs to outstanding stood at 3.6% in the first quarter of FY 2018-19, up from 2.4% in the same quarter of FY 2017-18.