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New Delhi: Several senior bankers with some state-controlled lenders are reportedly against providing any further grace period to student debt repayment schedules, beyond the inbuilt moratorium that most lenders offer for these loans. It has been reported that premier B-school like the Indian Institutes of Management (IIMs) want lenders to extend the loan repayment period by six months or more for students.
The prestigious institutes expect a delay in joining dates for the freshers graduating in 2020, and anticipate problems for the class graduating in 2021, too. The first instalment for graduates with student loans for the class of 2020 will be due in December.
It is worth mentioning here that most banks have an inbuilt moratorium clause in their student loans—the delay is usually for six months or one year from the date of completion of the course. At present, the two-year flagship programme costs between Rs 9 lakh and Rs 22 lakh.
The IIM Indore has formally initiated the process of seeking a further extension. Other IIMs like the ones in Ahmedabad, Kozhikode, Lucknow and Raipur, are expected to looking into the matter in case the hiring process gets deferred.
“Tough times call for all of us to come together and mitigate the stress of those in need… It would be great; therefore, if you can defer the repayment schedule of the study loans of our students by six months beyond the moratorium you already allow,” the ET reported, citing a letter written by IIM-Indore director Himanshu Rai to bank chairpersons.
Rai wrote to State Bank of India, Punjab National Bank, Union Bank of India and Central Bank regarding the issue. He said one lender has responded with a positive approach, but didn’t disclose the name of the bank.
Senior officials from PSU banks, on condition of anonymity, said there is already adequate moratorium being given students and a further extension is not needed.
“When we give an education loan, there is a one-year extended moratorium period. The option is available on all student loans taken for full-time courses,” Anand Subramanian, business head (educational loans), Bank of Baroda, told the financial daily.
The publication quoted IIM-Ahmedabad dean (programmes) Shailesh Gandhi as saying, “The institute is monitoring joining dates of the students and would respond accordingly.”
IIM-Kozhikode director Debashis Chatterjee mentioned that the institute will come to know the exact situation only after the 21-day nationwide lockdown ends, adding in case students ask for help, the institute will certainly intervene.