Accounts for three-fourths of pvt banks’ NPAs
CL Jose
THIRUVANANTHAPURAM: Is Kerala’s largest bank, Federal Bank, skidding on its education loan portfolio?
The level of non-performing loans (NPAs) or bad loans in its education loans portfolio shows that Federal Bank has burnt its proverbial fingers while supporting the numerous aspiring students with education loans.
The latest official statistics released by the state level bankers committee (SLBC), Kerala, reveal that more than three-fourths or 75 per cent of NPAs generated within Kerala by the private sector banks have been contributed by Federal Bank alone.’
While all private sector banks together account for Rs161.42 crore in NPAs as of December 31, 2023, the share of Federal Bank alone comes to Rs120.82 crore which works out to 23.09 per cent of its education loans outstanding as per the latest available statistics.
No let up
In fact, in the case of Federal Bank, there has not been a let up in the NPA level in its education loans in the past two years. Though Kerala based banks such as South Indian Bank (SIB), CSB Bank Ltd and Dhanlaxmi Bank, all have their education loans portfolio, none of these is as critical as that of Federal Bank.
Even for Federal Bank with a total loan portfolio in Kerala valued at Rs61,569.17 crore, the quality of education loans is unlikely to pose any seminal challenge in the near future.
In fact, private sector banks have not been that active in the education loans space in the state until some years ago. While the outstanding education loans in the state by the private sector banks as of December 31, 2023 stood at Rs1161.42 crore, that of public sector banks’ were far above, at Rs13,167.42 crore.
Interestingly, the NPA level of public sector banks is only at a manageable of Rs847.95 crore or 6.44 per cent, which is far less compared with that of Federal Bank.
The other major contributors to the NPAs in education loans in Kerala include Canara Bank with Rs237.50 crore, though as a percentage of total loans it is only 8.71 per cent.
Within the PSU banks, while Union Bank accounts for NPAs valued at Rs158.60 crore (11.54 pc), State Bank of India (SBI), the country’s largest bank, has been successful in checking the NPAs as they have been contained at a meagure Rs111.05 crore or just 1.94 per cent of its portfolio.
Deluge of emigration
With a deluge of emigration taking place from the state among the youngsters for higher education, the demand for education loans also soared during the past few years.
The statistics on education loans during the past two years since December 2021, show that the education loans have surged in size by almost 67 per cent – from Rs8593.78 crore two years ago to Rs14,392.84 crore as of December 31, 2023.
