Education loans register 17% growth in FY23, turning positive first in five years
For the first time in five years, growth in Education loans Not only did it turn positive, but it also recorded a 17 percent increase in the most recent fiscal year ending in March 2023.
According to the Reserve Bank of India (RBI) Data, portfolio outstanding under education loans grew by 17 per cent at Rs.96,847 crore in the year 2022-23 as against Rs.82,723 crore in the previous year.
This is important because growth in education loans was flat during 2021-22 and was negative for the three years prior to it. Education loans decreased by 3 percent, 3.3 and 2.5 percent during fiscal years 21, 20 and 2019, respectively.
Bankers say the surge in demand especially for big-ticket loans for studies abroad and the willingness of banks to extend additional loans is driving the growth in progress in education from the last financial year.
“Before Covid, it was higher Non-performing assets (NPAs) In education loans banks have been forced to exercise extreme caution in due diligence while processing loan applications which has led to a negative trend in the overall portfolio. But after Covid, things are starting to pick up despite concerns about NPAs,” said a senior official at a large public sector bank Business line.
Business lineInquiries from some banks revealed that the volume of education loans offered remains “very low” and is only shown as part of the personal loan segment and they are wary of disclosing specific figures.
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to caution
Higher education loans at local institutions are more wary than some leading banks due to “doubts” about job opportunities and the ability to repay after completing studies, some applicants revealed. “Some of our students have informed us that a leading bank in the public sector has refused loans on the basis of low average salary packages after completing the course,” said an employee of a private business school.
Non-performing assets (NPAs) in education advances were 7.82 per cent of the total portfolio outstanding at Rs 80,000 crore at the end of Q1 FY23. Full-year NPA data is yet to come.