Genuine students deprived of facility?

By R. Ravikanth Reddy

HYDERABAD, AUG. 23. The much hyped liberalised educational loans scheme announced by the Union Finance Minister, Mr. Yashwant Sinha, in the last budget seems to be losing its steam, caught between bureaucratic approach of bank officials and students who are trying to misuse it. And the sufferers are students in genuine need of a loan.

It's the same old story of making endless rounds to banks, meeting callous officials and submitting heaps of documents. Still, there is no guarantee that the loan is sanctioned. "It's a herculean task to make them give loans, despite being told by Parliament. The Government should change the officials' mindset first and then announce such schemes," says Lokesh, a student planning to do his M.S. in Britain. He was made to run from pillar to post and finally given an indication that it was difficult for him to get a loan from the bank.

Same was the case with some of his friends, who could experience the bureaucratic hurdles, most of them illogical, in sanctioning of a loan. He and his friends want the bankers to shed their inhibitions and implement the scheme framed for the benefit of students of lower and middle class families.

"Conditions laid out by banks to be eligible for their loans are demanding. Our parents should have a healthy bank account spread over a period of several years. We should show property worth several times the loan amount. If we are financially healthy why would we need a bank loan at all," they question.

However, the banks have a different story to tell. "Most of the students and parents are trying to take undue advantage of the scheme, particularly with regard to sanction of loan without security," says a senior official of a bank. The scheme specifies that loans up to Rs. 4 lakhs can be given without any security. This particular leverage on security is being exploited by even rich parents. "They simply seek Rs. 4 lakhs so as to escape mortgaging their property or showing some security," says a bank official. He, however, reminds that banks have every right to verify the repaying capacity of students.

As a bank official explains, students just want to use bank's money entirely for their study. According to him, even in the case of the lowest fee structure, a student has to spend Rs. 10 to 12 lakhs during the course abroad. This is generally paid in parts in each semester spread over a period of two years. But instead of coming to the banker for the amount they fall short of, they want the bank to release its share first.

This is because in any university abroad, students can join the course if they spend Rs. 2 to 3 lakhs initially, which covers the first semester fee, travelling expenses and the initial expenditure in a foreign country. After that they take up a part- time job and earn good money to meet their expenditure towards tuition fee and other expenses. Now, they want the bank to invest that initial amount so that their money is safe.

According to an official, students and parents don't even agree to the conditions that the bankers would pay the amount in four equal parts spread over the four semesters and the rest of the fee required for each semester could be borne by parents. "This itself shows that they want to `use' banks rather than taking the help of banks. And this happens in a majority of cases where parents can easily afford that initial amount," he points out.

"But the scene is not as bad as what the students are projecting, at least not with our bank," says, Mr. Seetharama Rao, Assistant General Manager, State Bank of India. "The SBI has outstandings of Rs. 63.43 crores as on March 2001. Between April and June 2001, the bank has sanctioned Rs. 6.21 crores benefiting 331 students in the State," he says. He dismisses students' allegations saying that providing educational loans brings good business to the bank since they earn precious foreign exchange. But there are a few problems, he agrees. "However, no deserving candidate has gone back without a loan from us," he says.

He suggests that students be more honest with their repayment capacity. "We all know how passbooks are flooded with money a few days before they approach the bank. Trust is important between bankers and people," he says and defends the strict measures adopted by banks. "Afterall banks are in business and they have to be wary of elements misusing the scheme," he adds.

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Section  : Southern States
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