Banks seek credit guarantee on edu loans

Banks have urged Reserve Bank of India to allow a cushion in education loans domain in the form of a credit guarantee scheme. Rising NPAs in the education loan segment have provoked banks to ask for such a scheme. The idea was proposed in a meeting of RBI Deputy Governor Subir Gokarn and his team with heads of 11 banks in government, private and foreign domain. The meeting was attended by the chairmen of SBI, Punjab National Bank, Canara Bank, Bank of Baroda, ICICI Bank, HDFC Bank, Allahabad Bank, Karnataka Bank, foreign banks such as HSBC and Standard Chartered Bank. The dipping asset quality of education loans owing to delayed repayments coupled with collateral free lending upto Rs 4,00,000 have posed a major concern for banks. "While the intention is for a greater common good, the borrowers defy repayments as the banks have no means to impound them," bankers said.