With reference to the Editorial ‘Educating banks’ (September 29), albeit the significance of providing loans to students, the delivery of credit by banks for education is hardly encouraging. Lenders must critically examine the credit requirements per needs including cost escalation spread over the entire duration of the course.

In many cases, students pay donations to educational institutions for getting admission, however, it is not a part of the total expenditure. Students often rely on private money lenders for loans who typically charge a high rate of interest which hits their repayment capacity. This is a factor that needs to be considered to avoid stress in the servicing of bank loans.

For education loans, it is vital to provide flexibility in the prudential norms on income recognition and asset classification. Government must look to generate more job opportunities in the public and private sectors for the educated.

VSK Pillai

Changanacherry (Kerala)

With reference to the Editorial, India Inc has stressed on the unemployability of the majority of the young graduates. This could be the reason for banks to go slow on education loans. RBI’s priority sector lending tag is not enough to boost the credit offtake in this space.

Loans for premium institutes are easy to avail, but it is harder for second and lower rung institutions.

So deeper collaboration between these institutes and lenders and the institutes’ placement record can be a benchmark to find average per annum salary.

Initial EMIs can be kept low and increased later as student’s income increases. Ultimately the objective should be to have flexibility so that it becomes win-win proposition for both lenders and borrowers.

Bal Govind

Noida

The rupee’s gyrations

Recent sharp fall in the rupee against the dollar is now a matter of concern for both citizens and policy makers. Energy prices, gadgets with import content, overseas travel/education, etc will cost more.

Considering that the Purchasing Power Parity exchange rate is around ₹24/ dollar, the rest of the cost is due to demand for dollar. Policymakers must step up overseas purchases such as of crude in currencies other than the US dollar which enjoys overwhelming dominance as a reserve currency. This could temper demand for the dollar and lead to a realistic exchange rate.

V Vijaykumar

Pune

Farmers and derivatives 

Apropos ‘Derivatives can de-risk agriculture’ (September 29). Yield risk in agriculture is covered by crop insurance, but farmers remain unprotected against the price risk. Derivative instruments of futures and options could provide the solution here.

When a farmer takes a put option on falling prices of the produce, he can sell his produce at a pre-decided price on the basis of the put option and avoid price loss.

If the price is high, he can sell it in the open market.

The premium for put option may be met from a common ‘agri put fund’, the government may create for farmers’ welfare.

NR Nagarajan

Sivakasi

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