Change the Game - Education Loans

http://www.thehindubusinessline.com/industry-and-economy/banking/why-education-loan-schemes-are-not-ticking/article3997032.ece

Why not bring Education Loans under the fold of Corporate Social Responsibility (CSR) of banks?

Every bank could earmark a certain percentage of their yearly net profit for distributing to meritorious students as scholarships through a carefully chosen set of educational institutions. The modus operandi can be worked out.

During 2010-11, ELs constituted 9.7 per cent of net profit of scheduled commercial banks, which is not a big sum. This will help banks boost their image in terms of CSR, which is of immense importance in today’s corporate world (even the Prime Minister mentioned about it recently in one of his speeches), particularly for financial institutions traditionally known as “agents” of socio-economic change.

Also, it will help save on both administrative and recovery costs involved in ELs. To let Education Loans continue as a loan scheme will be equivalent to allowing it to wither away like the Differential Interest Rate scheme of the yore.

If banks are aiming at serving a ‘noble’ cause, the CSR, rather than loan, route may be explored for Education Loans. This will be less harmful and embarrassing than a possible ‘waiver’ of the loans at a later stage.

(Business Line - M.R Das)