In a one-of-a-kind bid to check education loan defaulters, banks have now started to track students having availed loans from them using their Facebook and Twitter accounts. The modus operandi involves banks using information available on social networking websites to track down customers and get in touch with them with the help of local branch staffers when payments are delayed.
According to official figures, government banks have over 2.6 million education loan accounts with outstanding credit of about Rs 60,000 crore. The industry estimates that 5-6 per cent of these loans have turned bad. The government is yet to set up a credit guarantee fund for education loans.
Central Bank of India, the top provider of education loans to the Indian Institutes of Management last year, has switched to keeping a tab on borrowers through social networking websites. This is a step ahead from the earlier measures to track borrowers through alumni forums as tracking footprints online is much easier.
Under the Indian Banks Association’s model educational loan scheme, collateral is waived for all loans up to Rs 4 lakh, while those above Rs 7.5 lakh need tangible security and have to be taken jointly with the parents. However, in case of a default, banks have little recourse to recover the money, apart from filing a case.
Facebook, the world’s largest social network, is estimated to have more than 100 million users in India.