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Good thread, Rajan ji.
Self-financing colleges began in a big way in TN first. Illicit money earned in politics was invested in buying vast tracts of land on the outskirts of cities. Liquor barons & other thugs then built engineering colleges. https://twitter.com/swamy64/status/1311274456883564544">https://twitter.com/swamy64/s...
Self-financing colleges began in a big way in TN first. Illicit money earned in politics was invested in buying vast tracts of land on the outskirts of cities. Liquor barons & other thugs then built engineering colleges. https://twitter.com/swamy64/status/1311274456883564544">https://twitter.com/swamy64/s...
As availability of seats grew due to mushrooming of colleges, competition between colleges became hectic to attract all & sundry. The craze for engineering education was fuelled by IT companies offering handsome salaries a few years back.
Gradually, the colleges formed a cartel & hiked fees for payment quota & management quota. To tide over finance, poor students went in for education loans.
Since bankers were reluctant to finance students with poor school final scores & no collateral, political decree came in: No collateral upto 4 lakhs & only personal guarantee to be taken for loans upto ₹7.5 lakhs.
PC as FM even declared that if any branch manager of any Bank denied any student education loan, all that needed to be done was write a post card to FinMin & he would take care.
Many undeserving cases got loans. If any manager denied, the matter was escalated to the higher-ups or FinMin. Top brass in Banks wanted no complaints or censure from Ministry. Any donkey who complained invariably got the loan.
It was a cosy arrangement, with politicians who generally owned such colleges, laughing all the way to their Bank. Education loans of bright students were always a pleasure to give. Nothing gives more job satisfaction than knowing someone came up because of a loan you gave.
Loans with collateral were also not a problem. Repayment was generally forthcoming. The ones without collateral largely became NPAs. People who were staying in rented accommodations moved, leaving no trail.
Girls got married. Many refused to pay. Husbands said it was not their problem because the loan was availed before marriage. Fathers said, the girl is now married & is earning as well so he won’t pay. Bankers were made monkeys.
All along, it’s the money of the depositors that’s lent out. Not the bankers’ or the politicians. Huge NPAs in the Education loan portfolio of Banks is largely a political creation.
Things have improved a lot now, with not so much pressure on Bankers to finance all & sundry. But the legacy of bad debts will remain before it’s waived or written off forever.
