Page 41 - Banking Finance September 2018

ARTICLE

scheme provides for no collateral requirement upto
Rs.7.50 Lakh. Private Banks remained passive on this
front and mostly public sector banks bothered to
provide loan to young students without realizing the
malpractices adopted by many of them. Thus 95% of
the education loans are sanctioned by PSBs. These loans
now have started bleeding the banking sector
particularly PSBs with the default in repayment rising
to 7.67% of the outstanding as on Mar17 from 5.7%
two years ago.
Many times, borrower after completing the study takes
up job somewhere but conveniently forgets about
repayment of loan. However these borrowers being
of loan is now a universal banking truth. Infact the real
highly social media frenzy often leave traces of their
character and intent of a borrower is revealed only after whereabouts which can be effectively used by lenders.
funds are transferred from banks account to that of
borrower's pocket. Borrower is at liberty to change the In many cases of education loan, the students get the
negative reinforcement from the family regarding the
residence as its own convenience and so as the mobile
repayment of loans. It has been observed frequently
number which makes it difficult for the banker to find
the current whereabouts through traditional methods. that the family members come out with an excuse of
not having any relationship with the borrower thereby
The borrower feels himself away from the reach of
disown their liability and hide the borrower's
bankers and therefore rescued from the repayment
whereabouts. However there are many cases when
obligation. The social media status updates or latest
their social media account is showing their joint
post may be helpful in tracing the current whereabouts
photograph of just a few weeks/month before. This may
of borrower. In fact, the banker must be associated with
create the pressure on family members to reveal the
the customer on facebook, linkedin etc at the time of
current location and contact number of borrower.
giving loans and should be documented.
5. Sometimes borrower does not reveal the assets they
3. Sometimes details used to specify addresses are vague
posses in asset liability statement or in court/DRT
and itself does not provide any clue how to reach the
proceedings when banker is required to furnish the
borrower's place of residence and/or business location.
The officers who does the pre inspection and sanction complete list of assets to get attachment order against
these assets. Social media posts may provide the
may be understanding how to reach the address
necessary clue in this regard.
recorded in documents but once the new officials
replace the existing ones, they find it difficult to trace 6. Many time borrowers take the excuse of non repayment
the borrower on the basis of recorded address. Here of loans owing to ongoing financial crunch while his
also his social media profile and activities could generate social media trail is showing him enjoying family
the lead about his present location. vacation at an exotic location or hosting a house
warming ceremony for a newly purchased house. Once
4. The education loan is the biggest loan portfolio where
it is been placed before, borrower has to bite his words
the nature of activity itself resulting into borrower
and forced to repay.
shifted to other places and having entirely new
whereabouts. Policy maker emphasis on education being 7. In many situations, asset tracing has revealed that
the fundamental right and that no desirous student promoters used proceeds of loans to buy real estate and
should be deprived of higher education or vocational land in the name of minors and other who do not have
education because of financial reasons, thereby included an obligation to report or file tax returns. In some cases
it in the priority sector targets. The education loan children's of such promoters shares pictures of exotic

BANKING FINANCE | SEPTEMBER | 2018 | 41