This post has been self-published on Youth Ki Awaaz by Ranjeet Menon. Just like them, anyone can publish on Youth Ki Awaaz.

How The Govt. Is Helping Those Who Are Failing To Repay Educational Loans

More from Ranjeet Menon

The financial meltdown of 2008 had left every inch of the global market in tatters. The assumption was that like the previous periods of recession, the markets would swing upward again after a few years. But this time, it never materialised.

I think that the world of technology underwent a complete makeover from 2011. New technologies like the Cloud, Analytics, Artificial Intelligence, Automation, the Internet of Things (IoT) and a booming startup environment destroyed every existing business model, back then. This had a cascading effect on every industry and affected the job market drastically.

One of the biggest impacts of all of this fell on the education industry, particularly on the ones who were and still are aspiring for higher education. Incidents of borrowers turning defaulters and educational loans becoming non-performing assets (NPAs) have risen exponentially. Weak market conditions have become the bane of job-seekers after completing their higher education. Once they step out of the job market, it has become impossible for them to enter it again, forget getting better job opportunities even after more education and improving their skills themselves.

This has also resulted in a considerable drop in the educational loans being provided to future candidates. Financial institutions have traditionally faced a recovery of educational loans for a long time – specifically, from willful defaulters. In India, this is why the recovery of educational loans was brought under the umbrella of The Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act in 2002. The objective of this was to help financial institutions recover loans from willful defaulters easily. According to the act, willful defaulters are those borrowers who either have the means to pay back loans but do not pay willfully, or have taken loans citing one purpose and have diverted the amount for some other purpose, lost the money and are not repaying.

But this has become draconian now. It has been alleged that the banks misused the Securitisation Act to recover loans from every defaulter, even if they had defaulted because of macroeconomic conditions and reasons beyond their control.

Fortunately, the erstwhile Indian government and the Reserve Bank of India (RBI), the financial regulatory body of the country, took cognisance of the problem and came up with a smart and sensible solution. Three important changes have been made to the repayment policy of educational loans.

1. The education loan repayment period has been extended from five to 15 years.

2. The possibility of borrowers undergoing periods of unemployment between employment because of weak market conditions has been factored in.

3. The borrowers may not find employment with enough salary to pay the entire EMI amount initially. So, the borrowers can start repaying in smaller amounts and hike up amount to be repaid in due course of time.

To understand why this has been done, there are two scenarios to be considered.

1. For education loans above ₹7.5 lakhs, financial institutions take a collateral (in the form of land or gold or anything of value, etc.) – equivalent to or above the total loan amount to be repaid. But this is not just a mere exchange between a loan amount and an asset. Like every other loan, educational loans are also considered on the basis of the repaying capacity of the borrowers.

First of all, the borrowers are asked to provide a confirmation of admission from the institution where they wish to study.

Then, the financial institutions check if the institution (where the borrower wishes to study) is in their list of approved colleges.

After this, the borrower’s background is thoroughly checked. This includes their previous education history, work experience (if any), bank account details, financial credit score, etc. Borrowers are also asked to provide details of future job and salary expectations. This is done to ensure that financial institutions do not perceive any risk in repayment by the borrower.

But now, financial institutions are using the Securitisation Act to squeeze out money from every borrower without being sensitive to market conditions. It’s also alleged that whenever the loans become risky, they are shifting the blame entirely on to the borrower.

2. Broadly classified, there are two types of assets – tangible and intangible assets. Examples of tangibles assets are house, gold, land, etc. Educational loans, however, come under the category of intangible assets.

Using a tangible asset to recover the loan amount paid for obtaining an intangible asset is ideally a very tricky scenario. To do this, the ideal conditions are – either the degree has become worthless or the borrower is incapable of repaying. When the financial institutions themselves helped the borrower obtain the degree, they cannot claim it to be worthless. If the borrower happens to be a defaulter because of reasons beyond his/her control (such as macroeconomic issues) and is able to prove this in a court of law, the financial institutions will never be able to recover the loan amounts.

It is this deadlock situation that the government and RBI have decided to step into. They are trying to ease the pressure on both the lenders and the borrowers.

The new government and RBI guidelines seem to prevent such a possibility. (Representative photo. Image source: DonkeyHotey/Flickr)

First of all, by extending the period allotted for loan repayment and dividing the repayment amount into equal EMIs over the entire duration, the EMI amount becomes considerably lower. In such a case, the possibility of borrowers becoming unemployed in between the periods of employment has been considered.

Finally, but most importantly, no defaulter can survive for 15 years without earning an income. Everyone has to earn money at a minimum level to survive. So, borrowers are given the opportunity to start with small payments and increase the amounts to be repaid during the life-cycle of the loan-repayment period.

There is a very important catch in the amendment that has been done. The amendment exercise was started in 2012 with further amendments in 2016. By default, financial institutions will consider the amended loan repayment scheme for new educational loans only. But, in my opinion, the amendment has not been done under the assumption that future borrowers can become defaulters and that those loans may become NPAs. The amendment has been done keeping in view the extreme distress the existing borrowers are undergoing.

If this is the case, it can be argued that existing borrowers will benefit from the new repayment scheme. The question here is, why hasn’t this been mentioned by the government and RBI?  This is simply because financial institutions have more problems dealing with willful defaulters. Providing the repayment-extension period to all existing borrowers will benefit the willful defaulters as well.

So, if the borrowers, who have repaid loans in the past and have excellent relationship with the people they have dealt with in the financial institutions, become defaulters due to genuine reasons (such as the market conditions), they can approach the financial institutions and request for considering their loans under the new repayment scheme. If they are refused, they can approach the appropriate court with the request.

Ultimately, only the excellent credibility of the borrower will come in handy here. So, it is very important never to lose focus from the repayment of loans – and more importantly, maintaining excellent relationship with the financial institutions, communicating with them constantly and making them completely aware of the borrower’s plight.


Featured image used for representative purposes only.

Featured image source: Pixabay
You must be to comment.

    Good day everyone. My name is Beatrice Edwards. I am citizen of
    The United States of America and I want to disclose a very vital
    information to everyone who cares to listen.
    Eight years of my life were wasted away. I had a very terrible
    disease.I was diagnosed with kidney stone problem.
    I couldn’t live my life like a normal human being all because of this
    disease. It got to a point where I almost lost my life. The doctors
    here in America gave me the shock of my life. I was told that I need
    a kidney replacement as my kidney has been damaged. I also gave up the
    ghost at the knowledge of my predicament. All this was because firstly,
    I had no money or health insurance. But to God be the glory, a very
    good friend of mine while I was on sick bed told me about the National
    Kidney Foundation (NKF) and how they can assist me.
    At first I never believed it was true until she inboxed NKF on my
    behalf and lo and behold. NKF replied back asking me to come over for
    treatment and a possible kidney transplant. And the most amazing
    part is that they told me that I could pay for my treatment and
    transplant instalmentally.Now, tell me, who will do this? The answer
    is Only but the National Kdney Foundation (NKF). To cut a very long
    story short, today I am hale and hearty and well again. All this was
    made possible through the divine intervention of the National
    Kidney Foundation (NKF).
    My brothers and sisters, please do not die in silence.
    If you are having a kidney problem of any sort or you need to sell/buy a kidney,
    please do not hesitate to get in touch with the NKF. They have all
    the necessary equipment and good doctors to take a very good care of you.They
    have their branches almost everywhere in the world, UK, USA, Ukraine, Belgium,
    Canada, Australia, and sixteen other countries around the world
    including Africa.
    I love you all and that is why am taking my time to share with you
    this very vital information. You can contact The National Kidney Foundation through their
    official email

    God bless you all.

    Beatrice Edwards.

More from Ranjeet Menon

Similar Posts

By IMPRI Impact and Policy Research Institute

By IMPRI Impact and Policy Research Institute

By IMPRI Impact and Policy Research Institute

Wondering what to write about?

Here are some topics to get you started

Share your details to download the report.

We promise not to spam or send irrelevant information.

Share your details to download the report.

We promise not to spam or send irrelevant information.

An ambassador and trained facilitator under Eco Femme (a social enterprise working towards menstrual health in south India), Sanjina is also an active member of the MHM Collective- India and Menstrual Health Alliance- India. She has conducted Menstrual Health sessions in multiple government schools adopted by Rotary District 3240 as part of their WinS project in rural Bengal. She has also delivered training of trainers on SRHR, gender, sexuality and Menstruation for Tomorrow’s Foundation, Vikramshila Education Resource Society, Nirdhan trust and Micro Finance, Tollygunj Women In Need, Paint It Red in Kolkata.

Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

Saurabh has been associated with YKA as a user and has consistently been writing on the issue MHM and its intersectionality with other issues in the society. Now as an MHM Fellow with YKA, he’s launched the Right to Period campaign, which aims to ensure proper execution of MHM guidelines in Delhi’s schools.

The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

Read more about his campaign.

Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

Her campaign #MeriMarzi aims to promote menstrual health and wellness, hygiene and facilities for female sex workers in UP. She says, “Knowledge about natural body processes is a very basic human right. And for individuals whose occupation is providing sexual services, it becomes even more important.”

Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

Read more about her campaign.

MH Fellow Sabna comes with significant experience working with a range of development issues. A co-founder of Project Sakhi Saheli, which aims to combat period poverty and break menstrual taboos, Sabna has, in the past, worked on the issue of menstruation in urban slums of Delhi with women and adolescent girls. She and her team also released MenstraBook, with menstrastories and organised Menstra Tlk in the Delhi School of Social Work to create more conversations on menstruation.

With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Read more about her campaign. 

A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Find out more about the campaign here.

A native of Bhagalpur district – Bihar, Shalini Jha believes in equal rights for all genders and wants to work for a gender-equal and just society. In the past she’s had a year-long association as a community leader with Haiyya: Organise for Action’s Health Over Stigma campaign. She’s pursuing a Master’s in Literature with Ambedkar University, Delhi and as an MHM Fellow with YKA, recently launched ‘Project अल्हड़ (Alharh)’.

She says, “Bihar is ranked the lowest in India’s SDG Index 2019 for India. Hygienic and comfortable menstruation is a basic human right and sustainable development cannot be ensured if menstruators are deprived of their basic rights.” Project अल्हड़ (Alharh) aims to create a robust sensitised community in Bhagalpur to collectively spread awareness, break the taboo, debunk myths and initiate fearless conversations around menstruation. The campaign aims to reach at least 6000 adolescent girls from government and private schools in Baghalpur district in 2020.

Read more about the campaign here.

A psychologist and co-founder of a mental health NGO called Customize Cognition, Ritika forayed into the space of menstrual health and hygiene, sexual and reproductive healthcare and rights and gender equality as an MHM Fellow with YKA. She says, “The experience of working on MHM/SRHR and gender equality has been an enriching and eye-opening experience. I have learned what’s beneath the surface of the issue, be it awareness, lack of resources or disregard for trans men, who also menstruate.”

The Transmen-ses campaign aims to tackle the issue of silence and disregard for trans men’s menstruation needs, by mobilising gender sensitive health professionals and gender neutral restrooms in Lucknow.

Read more about the campaign here.

A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

Let’s Talk Period aims to change this by

Find out more about her campaign here.

Share your details to download the report.

We promise not to spam or send irrelevant information.

A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

Srilekha has also contributed to sustainable livelihood projects and legal aid programs for survivors of sex trafficking. She has been conducting research based programs on maternal health, mental health, gender based violence, sex and sexuality. Her interest lies in conducting workshops for young people on life skills, feminism, gender and sexuality, trauma, resilience and interpersonal relationships.

A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
biodegradable sanitary pad vending machines in all government schools across the state. Her petition on has already gathered support from over 90000 people and continues to grow.

Bidisha was selected in’s flagship program ‘She Creates Change’ having run successful online advocacy
campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

Sign up for the Youth Ki Awaaz Prime Ministerial Brief below