Public Sector Banks are getting more and more cautious of giving big loans to students, especially studying at non-premier institutes. However, not wanting the deserving students to suffer due to lack of loans, the banks would be seeking for substantial data and documents from students, in cases where the loan amount is high or if pursuing education abroad.
This step has been taken due to the enormous rise in Non-Performing Assets (NPA) like students, taking loans for education, who are unable to repay with interest within the given time.
Moreover, the demand for education loans has increased about 5% in the first six months of 2015-16, over the corresponding period of the previous financial year.
Earlier, officials at Reserve Bank of India (RBI) had said that all banks must create flexible repayment structure for education loans. It has been advised that banks should look at the possibility of providing the options of different and flexible repayment structure to students –who have taken loans– based on their employment and salary patterns.