STUDENTS CHEATED : Shameful Attitude of PSU Banks :

Shameful Attitude of PSU Banks


              Students in need of funds to pay college fees are denied loans by banks on the flimsiest grounds while thousands of crores are swindled by politicians and businessmen in the guise of loans.

Extracts from an analysis by GURPUR on NPR is appended to indicate the magnitude of frauds in banks. 



First-gen students fight for bank loans


      Chennai:DespitetheCentre’s directive to nationalized banks to extend educational loans to eligible candidates without any collateral, many banks are reluctant to do so, it has been revealed. This year, more than 100 first-generation students in the state who had scored more than 80% in their Class12examination and allottedseatsin engineering colleges are struggling to get admission because banks have refused to provide them loans without abona fidecertificatefrom the college concerned, a citybasedNGO revealedon Friday.
D Sherin of Velicham, an NGO, said: “Students attending engineering counselling have to pay an advance of 5,000.After theseatis allotted, the students have to pay the college fees within 15-20 days, failing which the seats are forfeited. Students alsocannot apply for bank loans without bona fide certificates from collegeswhich providethecertificates only after the full annualfeesis paid.”
A student from Thiruvallur, who scored 1,121 out of 1,200 in the Class 12 examination, said: “The college asked meto pay 72,000before getting theloan andsaiditwould give a bona fide certificate after paying the fees. But banks are not willing to provide loans without the certificate. So my parents have to borrow from private lenders at a huge interest.”

     “Colleges should provide bona fide certificate immediately after admissions to help students procure bank loans,” Sherin said. “Students allotted engineering or medical seats in counselling should be admitted in colleges and given time to get financial aid from the government. Some privatecolleges are charging more than whatis prescribed.”

     “Many brilliant poor students are facing difficulties to getloansfrom banks and many of them attempt suicide,” she said. Velicaham has set up a helpline (No. 9698151515) for thosein distress.


       “The bad loans of public sector banks grew by a whopping 56% during 2011-12. This has little to do with slowdown and points to a deep systemic malaise. Assuming that the government wants to do something, what steps need to be taken? And what should investors do? “


The Iceberg: Restructured Advances

      “Besides NPAs, every bank has a sizeable portfolio of restructured advances, not included in the NPAs at present. Restructured advances are those that were prevented from being classified as NPAs by rescheduling them by giving extended holiday for repayment of loaninstalments as well as interest to give the borrowers some more time to meet their commitments. Until 2001, these restructured accounts were considered NPAs, but to provide reprieve to banks and borrowers, the Reserve Bank of India (RBI) magnanimously took a decision to permit these loans to be treated as standardCredit assessment in PSBs is inadequate………”

    ” Decisions with regard to large value loansusually get clouded by internal and or external pressures. It is often said that the large value loans in PSBs are often fixed in advance—much like match-fixing. This puts public resources at risk for the personal gain of industrialists with political clout. The ‘cash forloan’ scam unearthed last year revealed how this works. Most loans that are granted under (political or corporate) pressure often turn into NPAs within about a year……..”

    : Most often, financial mismanagement by borrowers results in loan defaultDebt Recovery Tribunals (DRTs) are specialised courts for speedy disposal of recovery cases filed by banks. There are 33 DRTs in the country with as many as 67,000 cases involving over Rs1,36,000 crore pending before them as on 31 March 2012…….”

    “The fact is corruption has affected DRTs too. Cases are deliberately dragged on either due to the interests of the parties or simply incompetence of the judges, giving the impression that DRTs are overloaded with work. If the speedy disposal of cases makes some of this disputed Rs1,36,000 crore available to the banks within the next two years, the government will not have to pump additional capital into banks. This will save taxpayers’ money and bring down fiscal deficit substantially…….”