Getting credit from the bank is not as easy as it seems in bigger cities after the credit card revolution. Tele Callers don’t call you for loans so often. Even for Banks, not all loans are risk free.
Funds are allotted for general people by the Government, Policies are in place, but implementation is poor. Middlemen ask for their cut. Those who are need find it difficult to get a loan. Many of those who take such loans, give a lot of money to middleman and has no intent to return the principal too. They never mind interest rate or giving away some money to get the loan unethically.
High level of Babudom at local branch level of Banks makes it more and more difficult for ordinary people. More focus on red tapeism and less on actual due diligence too is one of the major causes of Bad debt cases. Bad Debt was always there. Banks find it difficult to keep track of such loans which eventually becomes bad debt. So they become very cautious while distributing loans. Which makes life difficult for those, who are in genuine need.
Life is not that tough for those who have secured admission in premium institutions. They get much easier loans for paying their tuition fees. Because Banks feel they will definitely secure a good job and will have the ability to pay back loans. It’s called as Scholar Loan Scheme (and similar names). If you see from Bank Perspective its considered as a Risk Free loan. Theoretically true. Scholar loan was considered to be low risk loan (if not risk free). That’s why it’s given with minimum hassles and less rigorous procedures. People get loans easily without showing any income certificate or a mortgage, which will be required in any other type of loan. Admission letter is sufficient to sanction such loans. Generally, SBI banks have a branch in each of the Premium institutions to get a majority of loan accounts.
But getting admission into a premium institution alone, can’t ensure integrity.
Recently a case came about IIM Ahmedabad branch of State Bank of India are searching for many defaulters. They all have taken education loan, taken a good job and are working in good companies. But they have decided not to pay their loan. This is not one off case, A similar case came up in 2006 with 20 such IIM Bangalore students. They are many cases which are still there in bank files.
Pointing out a certain institution is definitely not what I want to do here. It’s not about IIMA or IIMB. It is about mindset of people. It is about moral bankruptcy. Ethics in elite. At the most, I am questioning “need of money makes unethical” assumptions.
I am not even generalizing the people. Such people might be 0.1 % of population. But they are enough for damage.
We never focus on being Ethical. None of the entrance test does. These people are future of corporates and they all will be in important decision making positions. They will be taking decision, which we might not be aware, but will impact our lives. We get shocked when we hear cases like, Rajat Gupta, Enron, Union Carbides, Larva in Milk Solid, pesticide in cold drinks, heavy metals in our staple food. But these cases appear due to lack of ethics at every stage of life.
These People must be working at elitist corporate and are future leaders. Those who have chosen not to pay their own loans, which is less than their annual salary now will take decisions tomorrow. They will decide which all elements should go into your food and other items you use. They will decide where your hard earn money should get invested.
I strongly feel, Banks should name and shame them. Those who can’t manage their loan honestly, certainly can’t manage corporates and our future. Defaulters must realize they are committing an economic offense and technically are an absconding criminal.
As result for such bad debts for banks, procedure for loan becomes difficult; Many Poor find it difficult to take loan for farming and many activities which affects our economies.