Published: 16th March 2021
MP Karti P Chidambaram writes to FM seeking info on education loan recovery efforts
Education loans are meant to be a socially and economically relevant scheme and not a conventional commercial programme, MP Karti P Chidambaram wrote in his letter to the FM
Karti P Chidambaram, Member of the Parliament from Sivaganga wrote to Finance Minister Nirmala Sitharaman seeking clarity on two critical issues related to education loans that he had raised in Parliament on Monday. "What is the ownership of the various private collectors involved in education loan recovery efforts and what data do we have on the role they have played in student suicides in the country?" asked the MP in his letter to the FM. "I also request that details on commissions private recovery agents collect be furnished, as the Minister of State mentioned," he said.
Karti P Chidambaram had sought replies to the same queries in the Parliament on Monday, to which Anurag Thakur, Minister of State for Finance and Corporate Affairs had responded saying, "In 2015, the government started the Vidya portal, so that a single-window centralised system can be provided to the students and 68 per cent of loans can be availed through that. Loans of Rs 10 lakh to study in India institutions and Rs 20 lakh for going abroad are also provided through that. Students can start repaying after 15 years, failing to do so, they also have a one-year moratorium. It depends on the banks who they appoint as a recovery agent." He added, "If the banks employ recovery agents, there are strict guidelines for that. The recovery process for NPA accounts is regulated as per the RBI guidelines dated April 24, 2008, through which the RBI advised the banks to ensure that the contracts with the recovery agents do not introduce adoption of uncivilised, unlawful, questionable behaviour in the recovery process."
Citing his response, the MP further added in his letter, "Given allegations over coercion on their part, what oversight does the Ministry exercise over their activities, beyond RBI guidelines? Second, what is the Ministry's view regarding the average loan size, and specifically, a trend the appear to be witnessing of rising loan sizes but a falling number of loans? This suggests that fewer students are receiving these loans in order to pursue big-ticket degrees. At the same time, loans become more inaccessible to the poorest." Finally, he also stated that "education loans are meant to be a socially and economically relevant scheme and not a conventional commercial programme. Concerns over coercive practices of private collectors and the increasing exclusivity of the programme suggest a deviation from this core purpose and thus warrant immediate intervention."
Earlier last year amid the pandemic, the MP had asked for all student loans to be written off as there were no job prospects and "we cannot burden our youth with debts" he had said. "Average education loan size is under 10L. Outstanding loans are around 72K cr. Writing off all loans won't dent the banks, but benefits 30L young people. Most concerning is that collection is now being farmed out to Pvt cos, against the very spirit of Nationalisation of Banks," Karti P Chidambaram had tweeted in December 2020.