Education loan redesign may overcome banks' reluctance to disburse more

Of the Rs 35 trillion of retaill loans deployed by banks, just Rs 84,375 crore or 2.4 per cent went towards education loans

Education costs have been on the rise in India. For instance, fees at the Indian Institute of Management, Ahmedabad, increased 43.6 per cent between 2016 and 2021. But banks have been reluctant to disburse more education loans to meet the increased costs.

A Business Standard analysis found that the share of education loans in loan disbursal has declined 2.6 times in a decade. The share of credit outstanding for education loans decreased from 6.3 per cent in June 2012 to 2.4 per cent in June 2022.

Of the Rs 35 trillion of retail loan credit outstanding, Rs 84,375 crore went