Syndicate Bank is contemplating introducing flexible or deferred repayment options for the borrowers of education loans. The proposal is being analysed by the Bank mainly to help the people in the small towns who will be struggling to pay their EMIs in the initial periods of their employment.
“We are discussing this idea and hope to come out with such scheme for education loans,” said R.S.Pandey, Executive Director, Syndicate Bank. Under the proposed idea, the bank may reduce the EMI for the first two years as most of the people, who borrowed the loans, will be drawing only low salaries in the initial period. Their salaries may rise in the subsequent years. Then, the EMI amount can be increased so that they will be in a comfortable position to repay the high amount.
He stated that although education loans are available easily, students may either end up getting jobs that do not pay them well enough to repay their loans. During this phase, a deferred repayment scheme can be worked out.
However, banks relax norms for repayment of education loans on a case-to-case basis. If a person is not able to find a suitable job, he or she can seek an extension of loan repayment period. The extension of period will result in reduction of EMI amount.
Syndicate bank’s education loan portfolio stood at Rs.2745 crore for 2014-15 when compared with Rs.2768 crore in the previous year. It accounted for 12 per cent of the retail credit in 2014-15. In the total domestic NPAs (non-performing assets) of the bank, share education loan segment was just four per cent.