The Government of India has enacted a few big bank mergers in the recent past and is yearning for more. With SBI and Bank of Baroda done, now the government is eyeing on other Public Sector Banks (PSBs) like Punjab National Bank and Union Bank of India. Fortunately, these mergers have proven to be a blessing in disguise for student education loan schemes.
Where the education loan industry was looking at an increasing amount of stressed loans and the Non-Performing Assets(NPAs) touched the 9% mark, now these mergers have shown quite an applaudable improvement. With the help of its merger, Bank of Baroda Education Loan market share is expected to increase from 4% to 11% by March 2020.
These mergers are trying their best to denounce the claims that Student Education Loans in India and Abroad might see a setback. Serving as crucial support for the student higher education, Bank of Baroda registered a 21% growth while the rest of the banking sector was looking at a negative growth of -2%.
Though the major reason given by the government is to consider the outcomes of an amalgamation, bank mergers have a lot of other advantages.
Customer Base Increases
Market Reach Improves
Operational Efficiency Betters
Also, bank mergers synergize the networks and ensure low-cost deposits.
Bank of Baroda has been offering 3 education loan schemes so far, namely:
Now, with the inclusion of 2 Vijaya Bank Education Loan schemes and Dena Bank’s Vidya Laxmi Education Loan scheme, it poses as a big player in the strong education loan portfolio worth INR 68,000 crore.
At a time when the education loans seemed to drop a bit, the government gave them a boost by fostering an important merger. Bank of Baroda has also stood up to expectations. However, there are many other reasons also which have contributed to this augmentation.
As some top officials mention, Bank of Baroda has started offering collateral free loans up to INR 40 Lakh to some of its applicants. Though this is limited only to students of premier institutes like IITs and IIMs, it is still enough to grab the attention of many eyes.
Not only this, but the bank also introduced some brand new innovative systems to affect its performance a few years back. This new system focuses on aspects like improving customer services and delivering loans meticulously.
Some other benefits offered by the bank are:
The applicants get a free debit card.
The bank offers a strategic premium of 2%.
There is no age criterion to avail a loan.
Loans up to INR 80 Lakh for medical and aviation courses.
Insurance Premium for student borrower.
Apart from this, with the introduction of the new Model Education Loan Scheme, the maximum repayment period is now 15 years. This is another reason giving a boost to the education loan sector. The government has also been playing a crucial role by offering various Subsidies for Education Loan schemes. Many people availing student education loans have benefited from these schemes.
Education Loan industry might have passed by a low-phase, but these mergers are giving us hope for a brighter future for the industry.