Mumbai : Stating that bad loans from education segment are very high, Reserve Bank deputy governor R Gandhi asked credit information companies (CICs) and banks to ‘counsel’ the youth on good credit behaviour. “The young borrowers are oblivious of consequences of non-repayment on their credit track record. Can CICs and banks look at ‘catch them young’ policy for credit counseling and developing a credit culture in them?” Gandhi said at a Cibil event here.
“The awareness campaigns need to be focused on the new generation, even before they enter into a credit relationship,” Gandhi added.
He said the amount of non-performing assets of educational loans under Rs 4 lakh, which qualifies under the priority sector lending guidelines, was 7.54 per cent as of March 2014 as against the overall average of 4 per cent.
“Can CICs provide a periodic, non-chargeable credit report to the student loanees and make them aware of their own credit position?” Gandhi asked. The comments come within a fortnight of Governor Raghuram Rajan describing education loans as a “complex issue” as banks have to manage with the societal needs on one hand and the rising NPAs on the other.
The IIT and IIM-educated Rajan said even though State effectively subsidizes educational loans, one of the elite schools he attended has reported a problem on loan non-payment, and added the RBI is reviewing the scheme.
The need, Rajan had emphasized, was to track students better which is now possible using the Aadhar number and also have a good system of insurance where the not-so-successful students do not suffer.
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Psbs Should Look At Alternatives Beyond Govt Infusion: RBI
Welcoming the government’s move to selectively allocate capital to lenders, Reserve Bank deputy governor R Gandhi said PSBs will have to look at alternatives beyond the Centre’s support for raising money going forward. The budget has proposed to decrease the recapitalisation amount at Rs 7,940 crore in FY16 from the Rs 11,200 crore in FY15.
Apart from capital raising from other sources like the markets, there are various other options which the banks can follow for their capital management, including conserving capital by staying off risky assets, he said.
Gandhi also welcomed the government move to selectively allot capital to only a few of the 27 lenders, saying this will improve the efficiency.
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