Student Credit Card Scheme: Bengal fires fresh salvos at banks on loan issue

Kolkata, April 5 (IANS) The West Bengal government has fired fresh salvos at state banks over the alleged negligence in sanctioning and disbursing loans under the state's Student Credit Card Scheme.

Former West Bengal finance minister Amit Mitra, who is currently the Chief Economic Advisor to Chief Minister Mamata Banerjee and state Higher Education Department Secretary Manish Jain have communicated to the members of the the State Level Bankers' Committee (SLBC) that as many as 16,000 provisionally sanctioned cases under the scheme are lying pending.

In addition to that, Mitra and Jain have communicated to the bankers that as many as 51,000 loan applications under the said scheme are lying unattended by different branches.

According to documents available with IANS, Dr Amit Mitra, in a communication sent last week, has questioned the banks' reluctance in prompt sanction and disbursement of loans under the scheme when the state government itself stands as its guarantor.

However, the bankers have argued that often sanction and disbursement of loans on this count are delayed or held back because of procedural lapses in loan application. These procedural lapses in application are mainly pertaining to submission of supporting documents like PAN card and income tax return files of the parents of the loan applicants, the bankers added.

Just two weeks back, state's minister of state for finance Chandrima Bhattacharya informed the state assembly that since inception of the scheme in June 30, 2021, the state government has received 1,12,745 applications, of which the state government forwarded 1,07,899 to different banks operating in the state.

However, so far, the banks have sanctioned only around Rs 413 crore to just 20,000 loan applicants, Bhattacharya added.

An applicant under the said scheme is eligible for loan up to Rs 10 lakh against a simple interest of four per cent per annum.

Former bank trade union leader Ashoke Mukherjee told IANS: "State government's guarantee is not 100 per cent assurance that the bank loan under the scheme will be sanctioned and disbursed automatically.

"There can be many reasons why a loan applications even with a state government guarantee can be rejected. The first reason is of course procedural lapses in loan application like absence of crucial supporting documents and liabilities details, PAN card and income tax return files of the parents of the loan applicants. Secondly, although the West Bengal government describes the scheme as a collateral-free loan scheme, but under the existing norms, a bank can demand collateral security if the loan amount is Rs 4,00,000 or above. This can be yet another reason for loan rejection," Mukherjee said.

According to former journalist and economic analyst Santanu Sanyal, there had been several instances in the past that loan accounts with state government guarantee have turned into bad loans or non-performing assets.

"So, it is quite likely that the bankers will check other credentials apart from the state government guarantee before sanctioning the loan. Secondly, the bankers are well aware of the cash-strapped exchequer of the West Bengal government which is heavily dependent on state excise and high market borrowings for running the recurring expenditure. So, the bankers cannot really be blamed for their over-cautious approach in sanctioning loans under the West Bengal Student Credit Card scheme," Sanyal opined.