According to data compiled from all the state-level bankers’ committees (SLBCs), as of December-end (third quarter of this fiscal), Rs 8,263 crore belonging to more than 3.5 lakh accounts that have availed education loans have been classified as non-performing assets (NPAs) out of the total education loan outstanding of Rs 84,965 crore that more than 23.3 lakh accounts borrowed.
Stream-wise data shows that of the Rs 84,965 crore total outstanding amount, loans to medical students is Rs 10,147 crore (11.9%), engineering students is Rs 33,316 crore (39.2%), nursing Rs 3,675 crore (4.3%), MBA Rs 9,541 crore (11.2%) and all other streams together Rs 28,286 crore (33.2%).
In NPAs against the outstanding loan amount, nursing tops the list with over 14%, followed by 12.1% in engineering, 7.1% in MBA and 6.2% in medical. Other streams together have 8.4% of the outstanding loans as NPAs.
Doraswamy C, former convener of Andhra Pradesh SLBC, says: “Education is a priority lending sector, and beneficiaries must be sincere in returning the money they borrowed. But that does not happen in many cases. From evasion to negligence, there are many reasons for this. Besides, delays in interest subsidies payment by the Centre and other systemic problems also hurt honest re-payers.”
Education expert AS Seetharamu says: “The time needed to find employment for an engineering student is more than that for a medical professional. Nearly 30% of engineering students drop out annually and campus placements have been dipping. In cases of nurses, most leave the country and the banks don’t find them. Visas need to be linked to education loans. Domestically, they avail loans in one place but work in another.”
Further, distribution of education NPAs across the country shows that the eastern and southern regions, led by Bihar and Tamil Nadu, have emerged as the worst performers, while northern and western regions are the best.
Compared to the national average of 9.7% of NPAs, it is 14.2% in the eastern region and 11.9% in the southern region. It is only 3.3% and 3.9% in the northern and western regions, respectively, while it is 6.1% and 6.8% in the central and northeastern regions.
While all this data is for the first three quarters of this fiscal, data from previous years shows how the education sector is among the top contributors to NPAs after industry and agriculture.
At 21%, 16.7% and 13.6% in fiscals 2018, 2019 and 2020, respectively, the industry sector tops the table, followed by the agriculture sector — 7.8%, 8.9% and 10.3%. Comparatively, the figures for the education sector stand at 8.1%, 8.3% and 7.6% for the said three years.
NPAs in the housing and automobile sectors were under 2% for all years, while it was 2.1%, 2% and 1.5% for the retail sector.