Education loan delivery by banks in India: A qualitative enquiry

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Education financing is a key retail banking product for most commercial banks and a lifeline for large numbers of students seeking professional courses. This study aimed to identify the impediments in the successful delivery of this loan product in India, where it is marketed majorly by public sector banks under a common scheme devised by the government. The study adopted a qualitative approach to probe behavioral issues related to the credit appraisal process, which is the most suitable approach for unstructured exploratory design. Since credit managers in banks work with applicants for education loans, their insight becomes essential to understanding the issues plaguing with the smooth implementation and delivery of this scheme. Thus, ten public sector bank managers working in different geographical locations were selected using a homogeneity purposive sampling technique. The study collected 41 responses, which were then divided into 4 major categories. The responses were simultaneously transcribed manually to ensure that data remained close to the original verbatim of the participant. All transcribed interviews were imported into ATLAS.ti 8 Software for analysis. The 4 observational categories lead to a broad understanding that product accessibility, operational hurdles, scheme features and limitations in bad loan recovery are key bottlenecks in managing education loans. These responses had over 80% commonality on key issues of product feature and cost. It was concluded that education financing can perform better by improving access, rationalizing interest rates and liberalizing repayment terms. These findings can be used as input for tweaking the product for better performance.

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    • Table 1. Education loan portfolio at Indian banks in 2015–2019
    • Table 2. Coding and categorization of responses from respondents (through Atlas.ti)
    • Conceptualization
      Vimal Pant, Nidhi Srivastava, Prachi Pathak
    • Data curation
      Vimal Pant
    • Investigation
      Vimal Pant, Nidhi Srivastava, Tejinderpal Singh
    • Methodology
      Vimal Pant, Tejinderpal Singh
    • Project administration
      Vimal Pant, Nidhi Srivastava, Prachi Pathak
    • Writing – original draft
      Vimal Pant
    • Formal Analysis
      Nidhi Srivastava, Prachi Pathak
    • Writing – review & editing
      Nidhi Srivastava, Tejinderpal Singh, Prachi Pathak
    • Software
      Tejinderpal Singh
    • Validation
      Tejinderpal Singh
    • Resources
      Prachi Pathak