A Study on Credit Risk Management of Educational Loan in Indian Banks

Of late the banks are expressing their concern about the increasing rate of defaulters on educational loans. The main problem of default is in the case of overseas education, as students change their address without informing the bank (Vijayalaxmi 2006). Education being the priority sector, orders are being issued by the government from time to time, to keep the interest rates on loans very low. This makes it less profitable business, simultaneously loaded with risk of default. To effectively manage these situations, it has become important to improve the credit risk management system in the bank which would lead to decrease in the NPA of the banks by avoiding defaulters on educational loan.