Banks turn cautious on student loans

There has been sharp rise in the NPAs amid COVID-19 pandemic

With unemployment rising, the ability of those who have taken education loans to pay back has come down sharply. As a result, the non-performing assets (NPAs) have increased in the last one-and-a-half years. R. Nagarajan had taken a loan for his engineering course and started repaying it when he got a job at a start-up in the second half of 2019. In a few months, COVID-19 broke out and the start-up closed, leaving him and seven of his colleagues jobless. “I have not been able to repay the loan for over a year. And now I have a job with a lesser salary, and will have to close the loan soon,” he said. With the NPAs rising due to COVID-19, banks are very cautious. According to data from CRIF High Mark Credit Information Services, the education loan market in Tamil Nadu grew to ₹20,200 crore in March 2021 from ₹18,600 crore in March 2019. The data also showed that NPAs, measured in terms of portfolio at risk (PAR) for 91-180 days, increased to 16.3% as of March 2021 from 15% at the end of March 2020. PAR is the proportion of loans overdue (for a specific number of days) to the overall loans outstanding.