The Case for unsecured loans to bright but poor students of Orissa - by Sandip K. Dasverma

A. Description of the case:
With commercialization of education the access to education for the kids, not born in privileged homes, has significantly reduced.
Orissa is full of such underprivileged homes and first generation kid, in college.
By laws of nature many talented kids are born in economically underprivileged homes.
In addition they can also be sociologically (SC, ST) or religion wise (Muslim or Christian), or gender wise(women), handicapped.
Less than half of the underprivileged kids get to the school, in Orissa.
Only one hundred of every one thousand get to class ten(89 girls out of 1000).
Of these a small percentage of only 10% or less pass in 1st Division.
For any advancement of Orissa we need to offer full academic opportunity, in form of funding access, to every one of these that come in to the school system, to breast the tape of their educational ambition.
In other words, when one is born to an underprivileged situation he needs to have assured funding to fulfill his full potential - else the state(Orissa) will linger in it's present sorry state for a long time to come and progress will be stalled. Thus the need for unsecured loans.

B Actions Taken and results:
o With this in view a team of education enthusiasts of Orissa, Mr. S. C. Choudhury, Customs Commissioner of Vizag Port and Prof. Swadheenananda Patnaik, Director Institute of Mathematics & Applications, BBSR, met the Chief General Manager(CGM) of SBI at BBSR more than two years back.
o The CGM promised to have this problem redressed and
o He assigned a Dy.General Manager (one Mr. S. N. Tripathy) to this job. There was a flurry of letters and meeting with Mr. Tripathy, no results.
o Last year on July 2nd, 2005, SBI sent a special officer (Mr. Kanababu) to a meet of our group of education enthusiasts, to explain and advise them how to apply for Bank loans and what actions SBI has taken(video available):
o He explained with examples and rules, as to what SBI policy are.
o He explained that the meritorious (qualifying mark 60%) and poor (i.e. they don't have property to pledge and low income) will get unsecured loan, if forms are properly filled in.
o He explained that SBI policy is to sanction Bank study loan within 48 hours of a properly filled form
o Based on that criteria 67 kids from NIT Rourkela applied and were recommended by a special officer (who was sent by SBI, Regional office to NIT Rourkela)
o Some of these applications are still pending with the SBI
o None, yes NONE got unsecured loan so far.

C. Our Grouse and case:
o In paper and officially SBI states students are eligible, their marketing papers says meritorious students (60% or above marks) can get unsecured loan.
o Yet when they apply they don't get.
o But the Bank talks something to be their policy and yet it's officers do something else.
o So it is a long struggle going on for 3 years now to crack open the door for the meritorious and needy students of Orissa.

D. Our finding and suggested Solution:
o We have to find out the reasons for denial and have suggestions as to how to prevent it. If there are other solutions banks have found working some where they too are acceptable. Bottom line is sanction of Unsecured Loans to needy students.


o Reasons in our opinion are two fold:
The Corrupt branch managers and officers harass the students to extract bribe.
§ Make them run a few times and they will cough up or give up policy.


o Other officers, honest but indifferent, are afraid to give loan without security to students. They figure out ways, some times simply ignore regional office directives, (don't care whether Kids qualify or not), to avoid responsibility and remain safe.
§ Yes, since they don't gain anything from sanctioning a loan, they don't want to take the risk of being penalized for sanctioning a bad loan. - though their rule books and guidelines state otherwise. Thus they stick to the usual bureaucratic path, where inefficient cringe and corrupt benefit.
o And all the while our students run after them, or from pillar to post to get the loans, and thus fail to concentrate on their studies.


o What this does is that REAL poor can't even dare to try to come out of their morass and misery - because they don't have money to even get admission, unless accidentally some one they meet, who mentor, monitor and support them.
o It is same old story of Late Dr. P. K. Parija(scientist and educationist), in the 21st century, nearly 100 years after he had to go through it.


E…Civil Society Action Inadequate:
Not that we are not trying. We are giving at this time about 30 lakhs worth in scholarships to the deserving students (600 plus students). But that number is just insignificant compared to the size of the problem. The real need is so high that we need institutional finance – like countries where education has been commercialized. Like in USA where if you are meritorious the college will manage to help you out with student loans. Unfortunately, the Indian system has followed the US pattern of commercialization of education but not it's financing patterns.

F. Banks are still behaving the old way:
Loaning money is a favor not a business deal, even today. They say old habits die hard.
Due to political pressures they are forced to let go the big fish (with crores of uncollected loans) - - but they are killing these budding talents for a few crores worth student loans.
We do want BANKs (yes all banks, not only SBI) to help resolve this issue of financial access to the poor and needy but bright and hard working students or Orissa, asap, at least before 2006-2007 academic season, starting this July,2006.

G. Banks need to be proactive:
The banks need to set and meet educational loan goals and sanction at least a fixed quantity of unsecured loans in the coming year, to meet that goal.
A suggested out line for SBI is below but other banks should come up with their own goals and submit them for public view and transparency.
Post Matric – Rs. 6 to 10 thousand – 2000 @ 65 in each of 30 district =1.6 crores
Plus 2 / plus 3 – Rs 10 thousand – 1000 @ 35 in each district = 1crore
Engineering Diploma: Rs. 10 thousand – 300 @ 10 in each district = 0.3 crores
Engineering: 20 to 30 thousand per year - 1000 @ 35 in each district. = 2.5 crores
Medical: 30 thousand per year – 100 @ 30 in each of the 3 colleges =0.3 crores

H. Recommended Solution:
The issue of corrupt branch managers is to be resolved by banks through administrative process, which civil society need not worry about – except if loan scholarship goals are not met they should be penalized and ATR(action taken report) made public.
Not sanctioning stipulated number of loans should be considered a dereliction of duty.
I would even suggest the Branches should have assigned quotas – and they shall be answerable to this state consultancy/advisory body, if they don't meet them. In case of harassment there should be a advisory body of Bank officials and Academia in each district.
It should be made a responsibility of the Banks to release to media applications received and loans sanctioned each month.
48 hours is too ambitious but if they can be sanctioned in 2 weeks time or better it should be considered adequate.
About the fear of other branch managers as "unsecured loans" have no safety net for the Branch Managers. This problem seem to have been solved by Hyderabad Regional office of SBI. This is what they have done:
A person who is more permanent in the area and traceable – a resident of the area who is also a State Govt, Panchayat, Central Govt. or similar gives a written undertaking that in case of the loanee disappearing not being traceable – they undertake to find and give their addresses. The reason is that when kids graduate from destitute conditions to be an engineer or a doctor – they abandon their village and take their either old or economically weak family members to their place of work in far off urban areas, like Mumbai or Delhi. Some times they cut off their contact or their relatives back home don't give their addresses thinking they are doing a favor to their now established ward. Once the address is obtained, all banks have institutional mechanism to collect money, which gets triggered.
The upcoming ID card system in India should make even this process unnecessary – because they can be easily traced in no time.
Banks should share between them any success stories in student loan collection between each other and come up with a standard operating procedure
NIT Rourkela should be declared as an "Institute of Eminence", like the IITs, (which it is being ranked 17th in India) so the loan can be sanctioned at the college Branch of SBI.
Other old colleges like UCE, Burla, S.C.B. Medical College, can and should be sanctioned "Institute of Eminence" status.
A public watch body in each district may be set up to bring misuse of the privileges both by the bank and the students can be investigated and finding reported for correction.