Chandigarh: Banks in Punjab and Haryana have been advised to extend education loans only to "meritorious" students as defaults are increasing.

"The non-performing assets (NPA) level is certainly on higher side in case of education loan advanced collateral only the meritorious rather than the deserving candidates should be considered for granting education loan," State Level Bankers' Committee (SLBC) Chairperson Usha Ananthasubramanian said.

The NPA level in education loan sector (collateral free) has reached 4.31 percent (Rs 18.11crore) in Punjab and 4.2 percent (Rs 17.41 crore) in Haryana, as per data provided by SLBC for the period April 2011-March 2012.

She was speaking during the SLBC meeting held here on Tuesday.

As per the Reserve Bank guidelines, banks are required to grant collateral free education loan up to Rs 4 lakh.

Banks in Punjab and Haryana have total outstanding education loan of Rs 1,201.52 crore and Rs 930.91 crore, respectively, till March 2012.

As number of defaulters in case of education loans are increasing, banks appear to have become reluctant in advancing loans to people as growth in advances in this sector has dipped in the two states.

As per the data, fresh education loan advances grew by mere 5 percent in Punjab between April 2011-March 2012, against growth of 15 percent in same period last year.

In absolute terms, banks lent just Rs 57.35 crore till March 2012 against lending of Rs 263.86 crore in the year-ago period.

In Haryana, lending towards education loan rose by 8 per cent against growth of 15 percent in same period. The lending stood at Rs 16.48 crore as on March 2012 against Rs 26.98 crore in the same period last year.


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