This is in context of Dratt bill under consideration of the government to make loans to students mandatory .Banking industry is passing through bad days. Agricultural financing and industrial financing without asking for collateral securities or guarantor from the borrower will add not at all in actual GDP but definitely add to NPA portfolio of the bank.
There is no effective tool in the hands of banks to recover the money from willful defaulters. It is worthwhile to mention here from my experience that 90% of defaulting borrowers are willful. Farmers and industrialists are seldom poor and it is never true that they are incapable to repay the bank's installment. In private banks due to fear of Recovery Agents who are more or less Goonda elements, borrowers repay the money in time . Because in private banks borrowers are very much sure that if they do not repay three instalments at a strech they may be humiliated and their assets if any may be taken away by recovery agents.Culture of olden days private money lenders prevails in private banks. As such the condition of bank's loan portfolio is not that bad as it is in PSU banks.
People know very well that there is none to ask for repayment of loan taken from PSU bank. Even if some Branch Managers spare time to issue notices or make follow up borrowers can afford say no or pull on the matter of NON-repayment of loans for years .Even if the suit is filed in court borrowers can manage advocates and judges for a decade or two easily.And it is astonishing but ground reality that borrowers of PSU banks now wait for scheme of compromise settlements and waiver of interest by government.Now-a-days even well -to-do family asks for when the scheme of waiver of interest will be launched.Farmers also similarly do not repay the loan and wait for scheme of rebate for those who repay the NPA loan. Borrowers willingly prolong non-payment of loan so that it is declared NPA by the bank and he becomes eligible for compromise settlement scheme under the guidance of RBI.There is no remedy for NPA.Lastly banks make adequate provision for bad loans and show lesser Net Profit. How long such unhealthy practice will cotinue. Our political leaders always plan for disbursement of loan for one sector or other. In the past they stressed on Home loan . personal loan ,retail loan and agricultural loan .
Now Government want Education loan for students without collateral security and guarantor. They know very well that hardly 10 percent of students are unemployed even after completion of their education .LEADERS ARE MUCH AWARE THAT JOB OPPORTUNITIES ARE RARE AND CANNOD EMPLOY ALL EDUCATED YOUTH. How will STUDENTS THEN repay even if they desire to repay. Ultimately loan will become NPA and it will do nothing but add fuel to fire. Unfortunately our leaders always indulge in vote politics and they never try to understand the ground reality .They neither listen to bankers logic to curb such unhealthy finances nor do they honour advices from courts of the country.
Therefore the draft bill aiming to encourage students to take up higher education and boost the nation's skill base will do nothing but contribute significantly in turning bank from sick to dead.But unfortunately there is no remedy once again. Because most of engineering colleges, MBA institutes and medical colleges are owned by political leaders .Such Politicals Leaders have been investing their black money in such building of such colleges. They charge exorbitant tuition fees from students without imparting quality education .Since poor students cannot afford such huge expenses,seats in their colleges remain vacant many times.
To ensure maximum Number One Profit from such business political leaders are noqw pleading for maximum loans to students. Let Banks go to hell.Government in the draft bill proposes that banks tie up with higher education institutions and offer clean loans to students.I do not disagree with the proposal of the government to enlarge nation's talent base . But I would like to ask the concerned Minister why do they not bother for repayment of loan.
How long will they distribute loans as charity ? Banks money is public money and at least past experiences of smallbanks going bankrupt should be eye opener of Greedy Political leaders of our country.Already banks are in problem , please do not aggravate the situation.Already NGOs have grown disproportionately in our country to ensure loans from the banks for fake Self Help Groups sponser by them. There is no doubt that number of fake colleges will also grow to loot the money from bank in the form of Education Loan.I hope leaders will leave vote politics before it is too late.
Please don't spoil the nation for vested interests.
