SHOMA PATNAIK | NT
PANAJI
With several local scholars in news for cracking national level competitive exams, it is now not only the parents who are keenly looking at higher education for their children.
Banks, it is learnt, are keeping close tabs on the number of students seeking admissions to professional institutes and are thrilled that more Goans are taking to learning. The reason is purely commercial.
Encouraged by the current leaning towards professional degrees, banks are pursuing the education sector actively for its potential to increase their income.
A top official at the Bank of India said that education is currently considered a thrust area and the bank has tied up with the Goa Institute of Management, Don Bosco College of Engineering and Padre Conceicao College of Engineering for education loans.
Prashant Naik, zonal manager, Bank of India – Goa, said, “It is a socially important segment to us and we will be going all out to increase our exposure in education lending.” Bank of India’s current education loan portfolio is valued at Rs 12 crore and it has significantly grown over a year, said Naik.
Other banks are not lagging in pursuing the education sector for business. Private sector bank, HDFC Bank, grabbed the contract from the the Directorate of Technical Education for collecting fees for all technical courses for the current academic year. HDFC Bank has also opened its doors for loans to students being admitted to the engineering colleges.
July-September are the months for admissions to professional colleges and banks said that they have increased their advertising in institutes. The Goa Medical College, the Dental College and BITS are regarded as prime targets for closing loans, said bankers.
According to a senior official in the Union Bank of India, Panaji, “With Goa being considered an education hub, the possibility of increasing lending is significant.”
Education loans are classified as priority sector lending and, therefore, all banks provide loans to students. The loans are for studies in India and abroad and interest rate varies slightly between banks. Banks seek no collateral for loans below Rs four lakh. However, while education loans are considered priority sector, they are not cheap with the average interest rate ranging between 10 per cent and 10.5 per cent for loans above Rs 7.5 lakh.
“The pricing is higher for education loans because education is an intangible asset,” said Naik. He added that education loans are regarded safe as the percentage of non-performing assets is miniscule.
According to data released by State Level Bankers Committee (SLBC), total education loans provided by all banks in Goa as on March 31 is Rs 151.7 crore. Banks, so far, have not pursued this segment aggressively but the situation is set to change because of the presence of IIT, NIT, management institutes, said a banker.