The Hindu Business Line : Education loans

This is with reference to the report, "Banks gear up to curb education loan defaults," (Business Line, December 5): The non-performing assets in education loans are mostly on account of a few intentional defaulters. I'd like to mention an incident.

One gentleman who was granted an education loan by a certain public sector bank for an MBBS course, went on to do an MD, and requested the bank for a repayment holiday for two more years. The bank agreed.

When the party failed to make repayment even after two-and-a-half years, the branch members contacted the student's father, but to no avail.

On finding out that the applicant was employed in a reputed hospital, the bank wrote a letter to the authorities. Within two days, the applicant's father contacted the bank, requesting the withdrawal of legal action and assured clearing of the entire liability in four months. The loan was fully recovered.

When customers can promptly pay electricity and phone bills, why not loans to banks. Then the government would not be forced to tighten the rules.

The majority end up paying the price for a mistake committed by a few.

S. Mahadevan

Nagercoil

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The banks have to ensure that loans are repaid. But what of defaulters who are unemployed and are not able to pay.

In fact, the education loan has become a problem because of the hike in fees charged by private colleges.

In Kerala, the incident of a student committing suicide led to agitations. The government should consider some sort of unemployment insurance in connection with such loans.

A. Jacob Sahayam

Thiruvananthapuram

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When banks are not able to recover the education loans from the applicant or from the guarantors, they should put a lien on immovable property and assets such as automobiles.

The applicant or his/her parents then cannot sell the property until the loan is repaid in full with interest and penalty. Lien should be registered. Before releasing the loan, banks must ensure that the guarantors have a credit balance in their account with a bank.

Also, the bank at which the guarantor has a credit balance should give a guarantee to the bank sanctioning the loan. This way the bank can have a hold on the applicant and the guarantor.

N. Sivsubramanian

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