Rescheduled Education Loan will not be Considered for Computing NPAs:RBI

Posted on:25 Jan 2017 09:32:24
Rescheduled Education Loan will not be Considered for Computing NPAs:RBI
25 January 2017 Current Affairs: In a bid to encourage banks to provide loans for education, the Reserve Bank of India has declared that rescheduling the period of payment of education loans due to the inability of the borrower because of unemployment will not be treated as restructured accounts for computing NPAs.

Banks can allow three rounds of extension periods, each not more than 6 months, during the entire lifecycle of the education loan, to be applicable only on unemployment/underemployment borrowers.

 However, banks are required to maintain a higher provisioning of 5 percent during the additional moratorium period and one year thereafter to cover risk.
In a bid to encourage banks to provide loans for education, the Reserve Bank of India has declared that rescheduling the period of payment of education loans due to the inability of the borrower because of unemployment will not be treated as restructured accounts for computing NPAs.

Banks can allow three rounds of extension periods, each not more than 6 months, during the entire lifecycle of the education loan, to be applicable only on unemployment/underemployment borrowers.

 However, banks are required to maintain a higher provisioning of 5 percent during the additional moratorium period and one year thereafter to cover risk.

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