Make education loans flexible: RBI

“There are lots of NPAs (bad loans) in the education sector. They have been rising in the last few years. It’s a matter of concern,” said RBI governor. Mr Rajan noted that banks are increasingly asking for collateral for education loans. “If it is above four lakh they have right to ask for that collateral but it is an issue,” said the governor.

RBI governor said education is one of the most important investments and more flexible loans can be created by using unique identification number or Aadhaar information.

“(like)If you go under a period of unemployment you get an automatic moratorium. Doesn’t have to be negotiated with bank, it’s written up in your contract. Similarly if you get really high-paying job you pay a little more. If you get low paying job or you go to public sector and work in public sector maybe you pay a little less. So, can we tailor such loans and how do we do it? There are a number of plans floating,” he said. Mr Rajan said that he was comfortable with current interest rates of 6.75 per cent but would stay “accommodative”.

RBI governor said that consumer inflation was a more appropriate measure given its higher weighting of food prices and services. He said that government need to pass the goods and services tax bill, as it would send “a strong signal” that India can overcome its political differences.

On KYC norms, RBI governor said it was important to make KYC simpler and easily accessible especially for the people who are moderately literate, who don't carry lot of documents. Mr Rajan said rules on consumer protection are in the works. “At the end of the year, will roll out a set of regulations on that.”