The percentage of education loans that has become non-performing assets (NPAs) has declined over the past three years. However, surprisingly, nursing and engineering are the top two streams where percentage-wise NPAs are the highest, shows information provided in the Lok Sabha.
In a written reply, finance minister Nirmala Sitharaman says, "The NPA level in respect of education loans has come down to 7.61% as on 31 March 2020 from 8.11% as on 31 March 2018."
"Reserve Bank of India (RBI), in a circular dated 6 August 2020, provided a framework for resolution of stressed assets to enable the lenders to implement a resolution plan in respect of personal loans, including education loans, covering grant of moratorium of up to two years while classifying them as standard subject to certain conditions. Further, the government provided ex-gratia relief by way of payment of difference between compound interest and simple interest, on the outstanding as on 29 February 2020, of eligible borrowers in the specified loan accounts, including education loans, for the period of six months from 1 March 2020 to 31 August 2020," the minister added.
Karti Chidambaram, a member of Parliament (MP) had asked questions on education loan as well the reasons for the rising education NPAs and far greater NPAs in some streams.
Quoting the state level bankers' committee (SLBC), the finance minister says, as on 31 December 2020, there were 2.48 million education loan accounts with an outstanding of Rs89,883.57 crore across the states. Out of these, about 9.55% or 36 million accounts with an outstanding of Rs8,587.10 crore have turned NPAs.
As per the data shared by the minister quoting SLBC, NPAs for education loans to nursing courses are the highest at 14.15% or Rs520.16 crore from 22,013 accounts. However, amount-wise, NPAs in engineering are the highest at Rs4,041.68 crore from 176,000 accounts. Education loan to the medical profession have the lowest NPAs of 6.23% or Rs633.15 crore from 17,676 accounts as on 31 December 2020.
NPAs in education loans, however, are way below the bad debts from other types of loans. Bad loans in industries remain at the top with 13.60%, followed by NPAs in agriculture and allied sectors at 10.33% as on 31 March 2020. While NPAs in the housing, vehicle and other retail sector loans have remained below 2%, there is significant jump in bad loans in consumer durables, the data shows. Over the past three fiscal years, NPAs in consumer durables have jumped over three times to 6.91% as on March 2020 from 1.99% in March 2018.
Coming back to education loans, as per the information provided by Ms Sitharaman, the FM, in FY18-19, almost all streams witnessed increase in NPAs. While NPAs in the medical profession, master of business administration (MBA), nursing, and other professional education declined in FY19-20, bad loans in engineering continue to rise.
