Education Loan NPAs in Tamil Nadu: Issues and Challenges

Shromona Ganguly and Deepa S. Raj in this RBI Occassional Paper series:

The study examines determinants of default in education loans in Tamil Nadu, a state with significant presence in education loan disbursal in the country. It uses account level data of over two lakh borrowers from two public sector banks and one private sector bank in an attempt to identify significant predictors of default. Empirical analysis suggests that loan accounts with higher interest rate and of lower duration have higher default probability while loans extended to accounts with Aadhar information, collateral backing or some subsidy element have lower risk of default.

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