Bihar: Small-ticket credit scheme for students could run up NPAs of Rs 300 cr

Chief Minister Nitish Kumar has on several occasions hailed the scheme, which has helped many, including students from backward classes and SCs, gain access to higher education.

Loans totalling Rs 3,500 crore have been disbursed so far under the scheme. In 2017-18, student credit cards were issued to 37,308 students, in 2018-19 they were issued to 26,796, and in 2019-20 they were given to 23,405 students. Bihar State Education Finance Corporation Limited, set up in April 2018, took over the implementation of the BSSC scheme from 2019-20 onwards. In 2020-21, credit cards for loans worth Rs 2,041 crore were issued to 1,36,217 students. The state government has set a target of issuing at least one lakh credit cards every year.

The loans given out under the scheme must be repaid within six months of a student getting employment or one year of the student completing the course, whichever comes first.

Shiv Prakash Jha, from the State Level Bankers Committee (SLBC), Bihar, told The Indian Express that a list of bad student credit card loans had been submitted to the government.

An SLBC source said: “We have duly completed all the banking processes of loan recovery, including serving of legal notices to the students and their guardians. The amount of bad loans would be around Rs 300 crore, and it is increasing… The NPA trend is very discouraging.”

Regarding the reasons why the threat of NPAs was cropping up, a senior official working on the BSCC scheme said, “As interest rates were much higher at 10 per cent until 2018, most of the loan defaults could be from this period. Moreover, with the state government being the guarantor of the loan, a number of students and their guardians are perhaps taking the loans for granted.”

The official, who did not want to be identified, said the loans had started becoming NPAs since 2021. “There has been some verbal communication between banks and the government, but there is a set format for banks to raise alarms on NPAs and a timeline for the state government to take over responsibility for loans that have become NPAs,” the official said.

State Project Management Unit nodal officer for monitoring the scheme, Sanjay Ghose, said that they had been getting several complaints from students who have got notices for loan recovery.

“Some students have also been going to the Janata Darbar of the CM demanding that the interest rates of 10 per cent applicable on the loans issued in the initial period be changed to 4 per cent,” he said. Authorities have not yet received a full list of the bad loans, Ghose said.