![]() Though economic theory focuses more on managing common pool resources (Ostrom, 2010), a special feature of higher education is that it suffers from the problem of “reverse tragedy of commons” (Piirainen et al., 2018 Mor, 2019) where the benefit that accrues to the society for imparting skill and knowledge surpasses the private cost associated with acquiring such skill and thereby results in underproduction of higher education in relation to the socially optimal or desirable level. It is in this light that the sharp increase in non-performing assets (NPA) in education loans extended by commercial banks in India in recent years is a matter of concern, as it could hamper the growth of bank credit for higher education in the country. Education loan portfolio forms only a small fraction of retail loan portfolio of all commercial banks in India (3.3 per cent) but it bears special significance in terms of skill formation required for enhancing productivity and efficiency in an economy. With governments, both at the national and sub-national levels, focused on providing universal primary education, the growing needs of a young nation like India in the sphere of higher education are increasingly being fulfilled by the private sector, although public sector institutions continue to play a significant role. Keywords: Education loan, non-performing assets, default risk, interest subsidyĮducation loans provide institutional funding required to harness and empower the human capital in a country, given the financial constraints faced by the public sector and individuals in meeting the rising cost of education. ![]() Empirical analysis suggests that loan accounts with higher interest rate and of lower duration have higher default probability while loans extended to accounts with Aadhar information, collateral backing or some subsidy element have lower risk of default. It uses account level data of over two lakh borrowers from two public sector banks and one private sector bank in an attempt to identify significant predictors of default. The study examines determinants of default in education loans in Tamil Nadu, a state with significant presence in education loan disbursal in the country. Education Loan NPAs of Banks in Tamil Nadu: Issues and Challenges ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |