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A weak job market and wilful default by even those in well-paying occupations have hit the education loan portfolio of state-run banks with non-performing assets rising up to around 47% between March 2015-2016, as per information provided in the Parliament. On Friday, the finance ministry told the Lok Sabha that NPAs, or bad debts, went up from Rs 3,536 crore at the end of March 2015 to Rs 5,192 crore on March 31, 2017. The surge occurred in 2015-16, with the pace backing off amid the last financial year. The issue is so intense for atleast five moneylenders that the load of bad credits has dramatically increased, with UCO Bank and Indian Bank standing out. In the meantime, the expansion in loan flow has also been under 10% amid this two-year term. In any case, what is surprisingly more dreadful is that there was just 3.4% ascent amid 2016-17, on the back of a 5.6% development in the earlier year, demonstrating that either request was less or banks were hesitant to loan. Bankers said that they had not gone slow on educational loans. They said that defaulters were rising as few students had not got steady employments, particularly MBAs or engineering graduates. Also, there are situations where even graduates from great schools who were placed in good companies are declining to pay. The issue is the absence of security and guarantees, which makes it simple to default. The government disclosed to Parliament that to diminish the rate of NPA in education advances, the IBA Model Education Loan Scheme has been adjusted to factor in the requirements of students. The changes incorporate a repayment holiday or a moratorium of course period in addition to one year, extra ban to represent spells of under-employment or joblessness, and extension of the reimbursement period to 15 years to lessen the equated monthly payment. The Center has likewise propelled a Credit Guarantee Fund Scheme for Education Loans (CGFEL) for advances upto Rs 7.5 lakh to ensure up to 75% of the default sum.
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