Money & Banking

Disbursal of study loans hit as banks insist on final-year certificate

G Naga Sridhar Hyderabad | Updated on September 10, 2020

Lending seen picking up in Nov, if exams happen

The Covid-19 pandemic has hit the disbursal of education loans and students are having to pay fees out of their pockets.

“After submitting all documents for an education loan, I have been asked to provide the final-year degree certificate, which has not come yet,” said G Divya, who has just joined a Pune-based institute for a PG course in communication.

Though final-year exams are yet to be conducted by many educational institutes and universities in the wake the Supreme Court judgment, which has made final-year examinations mandatory, many private higher educational institutes have already started the admission process.

“I wish to go in for an education loan for my daughter’s PG course, but had to pay the first instalment of ₹75,000 from my pocket as the processing of my loan application has been put on hold,” said S Suresh, who has applied for a loan from Punjab National Bank (PNB).

A PNB official said that going by the guidelines, loans for a new course cannot be sanctioned without proof of completion of the present course.

However, he added that a person paying from his pocket, can apply for a loan within six months from the payment date and get the money.

‘SBI proactive’

According to a senior State Bank of India official, this year was “unprecedented”, and the delay in completion of final-year exams and announcement of results could impact students seeking loans. SBI, however, has been proactive in processing educations loans, he said.

According to an official with Union Bank of India, loans can be processed, but the actual disbursal will happen only after the submission of final-year exam results.

According to RBI data, the banks’ gross education loans had declined 3.9 per cent till August compared to the same period last year. In the present financial year so far (April to July), education loans have fallen 1.1 per cent. As on March 2020, the total outstanding education loans is about ₹65,000 crore.

With many universities across States announcing final-year exams in September and October, and results expected in just a month or so, , banks expect education loans to gain some traction by November for the academic year 2020-21. However, the general demand is expected to be low this year, especially for overseas education, due to travel restrictions and delay in commencement of key courses.

‘Stay in India’

“Many students have put off overseas education plans to next academic year in view of the uncertainty. We see a 40 per cent dip in the enquiries as well as applications for education abroad,” said an executive with a consultancy chain, which has branches across cities. The Ministry of Human Resource Development has also noted the trend and recently constituted a panel to focus on making students to ‘Stay in India’. Generally, 6.5-7 lakh students go abroad to study every year, according to government data.


Published on September 09, 2020

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