Bad loans snowball in education sector as engineering, MBA grads battle unemployment

New Delhi: In 2010, Devendra Vishwakarma took a loan of over Rs 3.62 lakh from Bank of India for engineering studies. Devendra, a resident of Madhya Pradesh, passed out of an engineering college in Indore. He was good in studies, but could not get a job.

As Devendra could not pay three consecutive installments, the bank declared him a defaulter. Owing to which, Devendra will not get any loan from any bank in his life. Additionally, he won’t be allowed to avail benefits of any government scheme.

Unable to repay due to lack of jobs

There are many students in the country who are unable to repay the education loan due to lack of job opportunities. Therefore, in the last three years, the NPA (non-performing asset or bad debt) of education loan has increased about nine percent. Today, it stands at Rs 6,434 crore.

Nearly 60% of engg and MBA students remain jobless

According to the All India Council of Technical Education (AICTE), approximately 55 to 60%  (about 6 lakh) engineering and MBA students have not landed a job in the last three years. However, there is no data on how many of them had taken education loan.

Experts associated with AICTE and education say that about one-third of the students who take education loan do get placed after completing degree courses.

Companies’ requirements are increasing

AICTE’s adviser Rajiv says that the requirements of the companies are increasing every year.

According to the AICTE report, the placement of B Tech students has increased by just 1% in the last three years. In 2016, campus placement of three lakh 61 thousand 201 students took place, which increased to just 3 lakh 65 thousand 342 in 2018.

According to the report, in 2018, about 5 lakh (59%) of students did not get placements.

Decline in placements at MBA campuses

Half of the MBA students are not able to get a placement. In the last three years, the campus placement has reduced by about 3 to 4 %. The placement of MBA students was 52% in 2015, 51% in 2016 and 47% in 2017.

No jobs in the market

Former CEO and Chairman of Royal Bank of Scotland Meera Sanyal says that there are no jobs in the Indian market and this has led to rise in NPA. It can also be said that the curriculum in our education system does not meet the companies’ needs. IT companies say that engineering students should be groomed as per job requirements.

In response to an e-mail sent by Bhaskar, DGM of SBI Loan Department Avinesh Kumar Saxena informed that job creation, in particular, IT services/manufacturing sectors has not been at par with the growing number of educated youths.

(Story: Amit Kumar Niranjan)