TN accounts for 45% of growth in education loans

MUMBAI: Tamil Nadu has generated 45% of all incre mental education loans between FY13 and FY15. Of the total loan growth of Rs 6,597 crore in these two years, loans in Tamil Nadu have grown by Rs 2,969 crore.
The data gains significance in light of the state's chief minister J Jayalalithaa's AIADMK election manifesto promise to waive off student loans and farm loans.The manifesto coincided with the rise in defaults which had compel led State Bank of Travanco re to sell some of its defaul ting education loans to asset reconstruction companies.
A large part of the educa tion loans in the state are ad vanced by the troubled Indi an Overseas Bank and Indi an Bank. The numbers were pro vided in reply to a query in the Lok Sabha by minister of state for finance, Santosh Gangwar, on July 22. In his reply, the minister said that banks were not allowed to seek collateral for loans up to Rs 4 lakh and the government has launched a Credit Guarantee Fund Scheme wherein no collateral or third party guarantee were required for loans up to Rs 7.5 lakh.
In May Raghuram Rajan had cautioned against uns crupulous institutions mushrooming to take ad vantage of this collateral free loan.