Several banks have made it mandatory this year to give educational loans only to those who have permanent account number (PAN) in view of increasing non-performing assets (NPAs) in educational loans. In the event of a guardian or a co-borrower existing, he/she must produce a PAN card, a reliable source said.
Though some banks are demanding PAN only at a later stage, after disbursing the loan, some leading banks like State Bank of India (SBI) might be insisting on PAN for even processing the educational loan application forms.
The new eligibility criterion is being enforced due to difficulties faced in contacting the borrower after he/she completes his/her studies.
There were many such cases in each bank, which had led to a rise in NPAs in educational loans, a bank source said.
“The students, after graduation, might shift either to another country or some other place in the country. So, it becomes difficult for us to trace them based on the address given while obtaining the loan,” said a bank staff in charge of the loan section, seeking anonymity.
He added that PAN would help track them, if they defaulted. That is, if they apply for any other loans from banks, the default would be exposed and could even prevent them from obtaining any loan in future, a bank official said.
Mr N. Chandrasekar, AGM of Corporation Bank, told Deccan Chronicle, “PAN cards are necessary for anyone in their life.
Hence, the students should acquire a PAN before joining college. If some banks insist on PAN, they can readily produce the PAN details and process their applications quickly, rather than waste another 15 days to get a PAN.”
A bank source said circulars were issued to ensure PAN details were collected from those who had already obtained loans, and also from those applying for educational loans this year.
“We hope that when we insist on PAN cards, the NPA will come down after a couple of years as the students will have reason to repay the amount,” said the bank source.