Student Credit Card Scheme: West Bengal issues warning to banks on loan issue
The West Bengal government has fired warnings at state banks over the alleged negligence in sanctioning and disbursing loans under the state's Student Credit Card Scheme.
West Bengal's ex-Finance Minister, Amit Mitra, who is now the Chief Economic Advisor to Chief Minister Mamata Banerjee, and State Higher Education Department Secretary Manish Jain have communicated to the members of the State Level Bankers' Committee (SLBC) that up to 16,000 provisionally sanctioned cases under the scheme are still pending. Moreover, Mitra and Jain have said to the bankers that up to 51,000 loan applications under the said scheme are lying unattended by different branches.
According to documents available with IANS, Mitra, in a communication sent last week, has questioned the banks' reluctance in prompt sanction and disbursement of loans under the scheme when the state government itself stands as its guarantor.
However, the bankers have argued that often sanction and disbursement of loans on this count are delayed or held back because of procedural lapses in the loan application. These procedural lapses in the applications are mainly pertaining to the submission of supporting documents like PAN card and income tax return files of the parents of the loan applicants, the bankers added.
Just two weeks ago, the state's Minister of State for Finance, Chandrima Bhattacharya, informed the state assembly that since the inception of the scheme on June 30, 2021, the state government has received 1,12,745 applications, of which the state government forwarded 1,07,899 to different banks operating in the state. However, so far, the banks have sanctioned only around Rs 413 crore to just 20,000 loan applicants, Bhattacharya added. An applicant under the said scheme is eligible for a loan up to Rs 10 lakh against a simple interest of four per cent per annum.
Former bank trade union leader Ashoke Mukherjee told IANS, "State government's guarantee is not 100 per cent assurance that the bank loan under the scheme will be sanctioned and disbursed automatically. He added, "There can be many reasons why a loan application even with a state government guarantee can be rejected. The first reason is procedural lapses in loan applications like the absence of crucial supporting documents and liabilities details, PAN card and income tax return files of the parents of the loan applicants. Secondly, although the West Bengal government describes the scheme as a collateral-free loan scheme, under the existing norms, a bank can demand collateral security if the loan amount is Rs 4,00,000 or above. This can be yet another reason for loan rejection," Mukherjee said.
According to former journalist and economic analyst Santanu Sanyal, there had been several instances in the past that loan accounts with state government guarantee have turned into bad loans or non-performing assets. "So, it is quite likely that the bankers will check other credentials apart from the state government guarantee before sanctioning the loan. Secondly, the bankers are well aware of the cash-strapped exchequer of the West Bengal government, which is heavily dependent on state excise and high market borrowings for running the recurring expenditure. So, the bankers cannot really be blamed for their over-cautious approach in sanctioning loans under the West Bengal Student Credit Card scheme," Sanyal opined.
