With an aim to achieve the ambitious target of a $5 trillion economy, the govt. announced merger of more banks a few days ago. After this months-long process gets fully implemented, there will remain only 12 Public Sector Banks (PSBs) in India. This merger will also give a boost to the education loan industry in India as the customer base of a bank will increase.
The current education loan market in India is around INR 73,300 crore and the PSBs fund almost 95% of that. Merging of banks provide supports to this huge corpus and the evidence can be drawn from the previous merger of Bank of Baroda with Dena Bank and Vijaya Bank. The merged bank showed a growth of 21% in the revenue while most of the remaining banks faced a drop.
Education Loans for Study in India and Abroad are facing a crisis like situation as the NPAs are rising. These mergers and the recent improvements in the case of Bank of Baroda look promising. The upcoming merger involves banks which collectively do a business of more than INR 100 lakh crore.
The merger of banks increases the collective revenue thus helping them secure a rank in the list of Top Banks in the World. This, in turn, helps in securing better funds and other multiple benefits from the World Bank and other international organizations. SBI merger was also done because it helped the bank rank among the Top 50 Banks in the World. This also helps in improving the global recognition of the bank.
As they are planned for an overall benefit, bank mergers have been improving the education loan sector too.
Coming together of multiple lenders will help in increasing efficiency.
The market reach will improve.
Banks may revise their education loan schemes and consider the needs of borrowers.
Customized scheme will increase the customer base.
The following table lists the anchor banks and the banks amalgamating with them.
|Anchor Bank||Amalgamating Bank||PSB Rank (by size)|
|Punjab National Bank||2|
|Canara Bank||Syndicate Bank||4|
|Union Bank of India|
1. Andhra Bank
2. Corporation Bank
|Indian Bank||Allahabad Bank||7|
The government and the banking sector are doing their best to give a boost to education loans and bring down all the NPAs. If you are also availing an education loan, learn how to easily repay it and not become a defaulter by clicking here. The government also provides many subsidies to help students ease their student loan burden.