While credit disbursal is being promoted across value chains to revive the overall Indian economy, it has been otherwise for the education loan segment. And this is revealed in a business dailies report which suggests that the number of students able to avail education loan has fallen sharply by 25% from 3.34 lakh students as of March 31, 2015 to 2.5 lakh as of March 31, 2019.

And the reason for the same is attributed to a tremendous increase in NPA level in the segment, which has doubled to 12.5% in the last 5 years. Nonetheless, despite the decline in number of students, there has been a phenomenal increase in the education loan amount disbursed during the period. In Fy'19, there has been a total disbursal of Rs. 22,550 crore under the segment as against just Rs. 16,800 crore in FY'16. This is reflective of the fact that banks are favouring big-ticket disbursals under the product category.

Average ticket size also increased from Rs 5.3 lakh to Rs 9 lakh during the same period.

Most of the private sector banks are not encouraging education loan amount of less than Rs. 4 lakh without collaterals.

"Banks have gradually shifted from lending to poorer students or those they consider risk in their ability to land a job or parents unable to put up collateral. Most private banks have a tie-up with elite educational institutions and they lend only to their students. Public sector banks have red tape, documentation and formalities before they give Rs 4 lakh loans without collateral. It's a dismal scene for less-privileged students," says the CEO of a private bank.

Education loan is part of the priority sector lending and though the targets are being achieved, banks give precedence to value rather than volume due to increasing NPAs from the product.

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