In an attempt to keep defaulters for education loans at bay the banks will track the students taking loans from their banks. This move which is technological sound will track the students on social media and thus the banks will have a wider web to track down students from social networking websites along with the assistance of local branch staffers.
Along with tracking, banks will also be able to post reminder messages on such social websites.
Out of the 2.6 million education loans lent out by state run banks there is a staggering amount of Rs. 60,000 crore which is outstanding at the moment. Out of such loans, industry experts are of the belief that five to six per cent of such loans have turned bad.
The government is yet to set up a credit guarantee fund for education loans reported Times of India. Also Central Bank of India has already switched to keeping a track of borrowers through social networking websites.
KK Taneja, field general manager, Central Bank of India, excerpted, “Earlier, we used to track them through their alumni forums. But now that most students have a presence on social networking websites, it is easier to track their footprints online.”
Even though personal information with most social networking sites is restricted, but banks will be tracking details through friends and known. Banks have little recourse to recover the money, apart from filing a case. Some banks track education loan defaulters through their online friends. “So, if from the same batch there are four account holders and two of them are defaulters we can track them through their batch mates’ friend list,” said a senior manager with a state-run lender based in north India, reported TOI.
Not only this, but the practice will prove to be beneficial for those clients who have moved overseas and help stay in touch with them.
As per the Indian Banks Association’s model educational loan scheme, collateral is waived for all loans up to Rs 4 lakh, while those above Rs 7.5 lakh need tangible security and have to be taken jointly with the parents.