ICICI Bank 'hesitant' in increasing educational loan portfolio

[Kalyan]

ICICI Bank 'hesitant' in increasing educational loan portfolio

Even as public sector banks are encouraged to sanction more and more educational loan, the country's largest private sector lender ICICI Bank has been going slow in increasing the portfolio under the segment.

"The bank was hesitant to get into increasing quantum of educational loans because it was difficult to handle the same in the context of the collection," ICICI Bank CEO K V Kamath had said at the 14th AGM held at Vadodara last month. The observation on educational loan portfolio was a part of the minutes of the AGM posted on the Bombay Stock Exchange last week.

It is part of the overall strategy where the bank sees more opportunities in corporate business compared to retail, he had said. "The growth in the retail has been impacted by higher level of interest rates and property prices in cases of mortgage loans," Kamath added.

At present, education loans carries an interest rate of around 12 per cent. Earlier during the month Finance Minister P Chidambaram had said India was the only country where education loan was given on such a large-scale, to about 14 lakh students.

About Rs 20,000 crore had been given as education loan, he had said. As on March 31, 2008, the total outstanding educational loan stood at Rs 20,547 crore against Rs 15,209 crore as on March 2007, a growth of 35 per cent.

Portfolio of education loan is likely to see high growth as education cost in the country is increasing. According to an industry chamber survey, school expenses, excluding tuition fees, have gone up from Rs 25,000 to Rs 65,000 per annum since 2000 on a single child.