Dalits, tribals prefer loans for home than education

People are reflected on the glass of a framed photograph of Bhimrao Ambedkar, as they visit a memorial dedicated to him, on his birth anniversary in Mumbai on April 14, 2016.

More Dalit and tribal families have been taking home loans over the past few years while the number of education loans has reduced, indicating a new pattern of investments among these communities.

A note prepared by the department of financial services in the ministry of finance shows the amount disbursed in home loans in 2017-18 , Rs 2,849.36 crore, has gone up by nearly 50% compared to 2015-16, Rs 1,954.57 crore. Sources add that the rise coincides with the government’s renewed thrust on ‘Housing for all’ by 2022 and the banks’ eagerness to disburse funds in an otherwise safer, booming sector.

“The PM also announced sops for Dalits and tribals on December 31, 2016. That further boosted the demand for loans in the housing sector,” said a source.

At a meeting of the parliamentary panel on the welfare of SC/STs, some members wanted to know if banks are still insisting on collateral in loans for Dalits and tribals.

“The Reserve Bank of India (RBI) regularly comes out with guidelines asking banks not to ask for deposits. This regular issue of guidelines perhaps indicates that some banks are asking for such deposits,” said a member of the panel.

The rise in housing loans coincides with the construction of more houses under the Pradhan Mantri Awas Yojna, a programme in which eligible recipients get money from the government to build their own house with a toilet.

“The government also has provisions for low-interest loans for the households in case they fall short of funds …” said a rural development ministry official who did not want to be named.

Meanwhile, banks are shying away from opening their purses for educational loans because of rising levels of non performing assets (NPAs) — loans that do not fetch returns.

Lenders are not ready to offer loans to students who have decided to pursue courses which are purely academic in nature.

Those opting for courses like business administration, engineering, law or medicine have a higher probability of getting a loan. NPAs arising from education loans has risen to above 7% compared to 5.8% in 2014-15, several bankers said.

Failure to get admission in “good colleges and universities” makes it difficult for students to get loans. This rating of institutions is done internally by banks.

“Banks need to be prudent in their decision making, as they are commercial entities, they need to maintain their balance sheets and therefore they need to take decisions which make commercial sense after all they cannot burn a hole in depositors money,” Ashvin Parekh, managing partner, APA Services said.

“It (loans) should be linked to the repayment capability of the borrower… experience reveals that low-value loans are more default-prone,” Soumya Kanti Ghosh, chief economic adviser, SBI said.


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