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Several banks have tightened the norms for granting education loans following rising defaults in this segment.
They have made submission of PAN (Permanent Account Number) details of the applicant’s parent/guardian (often the co-borrower) mandatory this year along with the loan application.
The Indian Banks’ Association (IBA) has pointed out that since students may not require PAN during their period of education, submission of PAN details should not be made a precondition for loan sanction. Yet, considering the ease of getting a PAN card, the students may be asked to submit the same during the course of their studies.
Meanwhile, State Bank of India, it is learnt, has made submission of PAN mandatory along with the loan application. On the existing educational loans, the bank is understood to be sending out letters asking the student-borrower and the co-borrower to furnish PAN details.
Submission of PAN details would help lending institutions ascertain the income of the parents and, in the event of a failure in repayment, refer the case to CIBIL (Credit Information Bureau of India Ltd).
A Central Bank of India official told Business Line that the bank helps student-borrowers obtain PAN cards. “PAN card is an identity proof. While parents go out of the way to get a community certificate, a driving licence or even a passport for their wards, why not a PAN card? And getting a PAN card is not as cumbersome as other certificates.”
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