The Hindu Business Line : Banks see no slowdown in overseas education loan portfolio

“We anticipate the growth impetus to continue, as there is a continuous demand for quality education and have estimated a growth of about 36 per cent in 2009-10.”

Shobha Kannan

Kolkata, April 1 The increased cost of overseas education because of the appreciating dollar and the uncertainty prevailing in the job market abroad may not have a significant impact on the overseas educational loan portfolio of banks, though, there might be a slight slow down in the number of applicants for such loans, according to senior bank officials.

Overseas educational loans account for almost 10-20 per cent of the overall educational loan portfolio of banks in terms of the number of applications received. However, the quantum of such loans is higher compared with domestic educational loans, senior bankers point out.

State Bank of India has witnessed a 50 per cent growth in its overall educational loan portfolio at Rs 6,500 crore. The bank has been witnessing 35-45 per cent growth in the segment over the last three years, according to Mr P. Nandakumaran, Chief General Manager, Personal Banking, SBI.

“We have not experienced any slow down for overseas education loans so far. Overseas loans account for less than 20 per cent of total loan portfolio. We anticipate the growth impetus to continue, as there is a continuous demand for quality education and have estimated a growth of about 36 per cent in 2009-10. We expect overseas education loans to contribute at least 20 per cent of the total growth,” Mr Nandakumaran said.

The average ticket size of such loans is Rs 10 lakh and the repayment period stretches between five and seven years, same as domestic loans. The applications for such loans usually start pouring in from May-June, for courses beginning in August/September.

The present economic downturn might not have a significant impact on overseas education as such courses usually extend for 2-3 years and things would start looking up by the time the course ends, according to Mr K.R. Kamath, Chairman and Managing Director, Allahabad Bank.

“There has been a 20 per cent drop in the number of applicants for GRE and GMAT. However, the reputed universities abroad have not reduced the number of seats and people are still going for quality education abroad so we do not anticipate a significant drop in the number of applicants,” Mr T.M. Bhasin, Executive Director, United Bank of India, said.

Overseas loan accounts for less than 2 per cent of UCO Bank’s overall educational loan portfolio in terms of number, however, in terms of quantum of loan it accounts for 8-10 per cent, according to the bank’s Chairman and Managing Director Mr S.K. Goel.

“Though there has been a shift from global institutes to domestic ones the demand for recognised universities abroad still remains high,” he said.

More Stories on : Credit Market | Education

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page