Edu loan defaults may hurt students’ credit score: CIBIL
Pointing to high incidence of defaults
in the low-ticket education loans, credit Information Company CIBIL on Thursday
said such default history might adversely affect students’ credit score and
their ability to take out other loans in the future.
The overall incidence of delinquency
on education loans is around 5 per cent, going by dues of 90 days plus. The
default rate for education loans with ticket sizes below ~4 lakh is
significantly higher (at 8.1 per cent) compared with large-ticket size loans,
CIBIL said in a statement. Comparative default rates for other categories are:
~4-5 lakh — 4.8 per cent; ~5-15 lakh — 2.1 per cent. For loan amounts above ~15
lakh, the long-term default rate is under 1 per cent.
The aggregate credit exposure of
education loans in the Indian banking system is around ~77,000 crore. This is
barely 1 per cent of total banking system exposure, and by itself may not
present a systemic risk, CIBIL said.
However, the importance of such
defaults can be seen in two aspects. First, these delinquency trends predict
the risk profile of future borrowers who will join the mainstream credit
market. Second, they may also be reflective of the potential job opportunities
in the industry.
Source | Business Standard | 1 September 2017
Regards
Pralhad
Jadhav
Senior Manager @
Knowledge Repository
Khaitan
& Co
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