A proposal the banks can’t refuse. By Sandip K. Dasverma

For more than two years me and some of my friends are pushing for bank loans for the needy and meritorious students, of Orissa, in professional colleges.
The public sector banks, including SBI, have on policy adopted that up to 5 lakhs, they will give loan, without any security, if a student is a first class student. B

In practice however this has not happened. Though as a publicity stunt they have
competed with each other to help students such as Dipak Das.

Two reasons that we have found from personal investigation, are:

1. Graft, i.e. by only making kids and their families run, a price can be extracted.
2. Past history:
a. It has been found that some students after taking loan for study default in paying back the loans. This has been highlighted by the 1st category officers above to justify their harassment. Additionally SBI and other public sector banks have in case of defaulters ended up in holding responsible personally SBI managers of the branches for these loans, per commercial practice. Faced with the situation other bank managers have started avoiding granting such study loans, altogether or have insisted on security.

The real poor have thus only two ways left for them:
i. To find a relative to come in and provide the security.
ii. Just give up the hope of higher studies after trying for a few months or bribe their way out of the jam. And many don’t have even money to pay the bribe. They pay bribe from the loaned money and are so bitter, that they are very reluctant to pay back the money to the bank
Thus the ‘unsecured’ loan for meritorious and poor students have fallen by the way side. This has devastated impoverished states like Orissa, where first kid in the college in many economically backward families and in backward areas are reaching colleges
Some of us have seriously looked at the situation. One solution is to create a corpus fund of say couple of lakhs and provide the security to the Banks to provide loans. This way a much smaller amount of money can provide bank security to much larger amount of Bank loans.

Example: Let us say college C’s alumni raise a fund of 10 lakhs. If we give this money away as scholarship to 40 people (@25 thousand per year) it will get finished in a year. However if we give it as loan to same 40 people, all we have to do is to continue for 4 more years and then it will repeat itself without any external money.
So 40 lakhs will perpetuate itself to provide for 40 students every year.
Still better would be to use these 10 lakhs and keep it in a bank as a security deposit. Or create a corpus fund from which will be used as a security. In this case 10 lakhs can be used as security money for 40 students each year and next year’s money can be used for another 40 and similarly so 160 students can be supported and the cycle repeated.
The other alternative will be to insure the loans and pay insurance from the earnings of the 10 lakhs.
I would like to have banks look at it and see what the holes in this argument are.

Advantages of alternative method:
1. Security money for say 160 students who take loan from the banks, without paying out the money.
2. Use the money’s yearly interest to pay the insurance premium for the student loans, thus leveraging the money to get loans for much higher number of students than the 40 otherwise possible.


Basic philosophy in promoting bank loan are:
• Students spend their time in studying and not waste their time to run to the banks.
• If they are admitted to, say NIT, and evaluated to have financial need, as per a standard, they are ensured loan.
• They pay back when they get job. If they don’t market interest are charged to them rather than subsidized student loan rates. These days good students, who go to good Engineering colleges, are getting jobs even before they leave college.
• They pay back the bank loan and insurance money as soon as they are capable, so the fund grows.

How too prevent default and reduce risks of student loans to SBI, some ideas:

1. We create SHG of the students from 1st year onwards, who are expected to persuade the passed out student to return the money – so they can get loan (using the general principles of SHG).
2. Since the senior most and next junior class students are still in the college at the same time as those who graduated out, and they still need money, they will have enough clout to push for repayment, by their seniors.
3. The SBI or other banks, which have a collection department, only need to get the address of the graduated students to ensure recovery. This can be easily ensured by the above non-traditional channels to reduce the risks involved.
4. Additionally, the students come one year later for the degree and convocation function. If college authorities are in the loop thus they can also help.
5. If we start it at an eminent college like NITR and test modus operendi we can fine tune and move them to other colleges, Most importantly, the seniors who help the juniors to network for jobs, will help pressurize the less than one in 100, who default.
6. Civil society members and eminent persons like the FFE facilitators can ensure that they will provide the addresses of the students, when they graduate.


What Banks can do to improve their public images and eradicate genuine grievances:
They can take few very simple steps:

1. Every year publish a budget their target of lone they want to sanction, on their web site.
a. With security
b. Without security.

2. Between September and March publish every month on web site, the progress:
a. Number of Applicants
i. For secured loans
ii. For unsecured loans

b. No of loans sanctioned by each branch divided in to two categories:
i. Unsecured
ii. Secured
iii. No of pending applications
c. Provide at each bank branch a list of names of loans status in each category in item b, which can be seen by public, similar to documents for public view per provisions of Right to Information Act.

3. Declare a few eminent institutes of the state as institutes of eminence, (which they really are) and qualify anyone admitted there for bank loans, such as:
a. NIT, Rourkela,
b. UCE, Burla,
c. IGIT, Samal,
d. CET, Bhubaneswar,
e. SCBMCollege, Cuttack,
f. VSSMCollege, Burla and
g. MKCGMCollege, Berhampore,
h. Ravenshaw College, Cuttack,
i. BJB College, BBSR,

My letter to PM on IITs - Feb 4 2007

To: Dr. Manmohan Singh,

Prime Minister of India
Tel: 91-11-2301-2312 , 2301-8939
E-mail: pmosb@pmo.nic.in
http://pmindia.nic.in/write.htm

cc: Mrs. Sonia Gandhi,
President of Indian National Congress and UPA
10, Janpath, New Delhi 110011 India
PH: 91-11-23014161 , 23014481
E-Mail: soniagandhi@sansad.nic.in, aicc@congress.org.in

cc:Mr. Naveen Patnaik, Chief Minister, Orissa, BBSR,

cmo@ori.nic.in
BCC: Members of Parliament of Orissa

Dear Prime Minister:

To all of us, the people of Orissa, the following news is a bolt from the blue. We are asking ourselves – What wrong, have we done, to deserve this, stepmotherly actions from Goverment of India(GOI), time and again?

Because unlike others:

1. We, Orissans did not in our protests (http://iiser.blogspot.com/ ) last year, use any of the disruptive mechanisms like:

* Rasta Roko,
* Rail Roko
* Bundhs etc

2. Instead we used peaceful and modern methods such as:

a. letter writing,

b. candle light vigils,

c. writing in news media,

d. talked to our representatives (MPs) and convinced them to talk to YOU and the Indian parliament.

But instead of being rewarded for our civil behavior and methods, it seems now we are being punished. In this time of strife and terrorism, in many parts of India and world, is this the message you SIR, want to send to your people?

The clear message seems to be: BE VIOLENT AND WE WILL THEN NEGOTIATE WITH YOU? OTHEREWISE WE DON'T CARE OR GIVE A DAMN, AS TO WHAT YOU SAY.

BECAUSE when those who get violent, get what they want, the civil society concludes as follows:

* Protest violently and you get an IIT or similar institution as reward (example: IIT in Assam, Central Institute of Technology, Kokrajhar, Assam as a deal with the Bodos, Sant Longowal Inst. in Punjab, etc.)
* and if you protest peacefully, GOI will punish you, i.e., even take away an announced for IIT or two.

* Hold us to ransom, YOU HAVE YOUR WAY.
* Do non-violent protest and WE GIVE YOU A DAMN.

We believe in peaceful, non-violent and non-disruptive protests and thus we are again writing to you.

We sincerely hope that you will annul the steps amounting to punishment of taking away an IIT from Orissa. Additionally, you will allocate an IIT for Orissa in the 11th plan, as was announced by your (the union) minister of state for HRD Mr. Fatmi on August 28th at Patna.

We also sincerely believe that the 2nd campus of IIT, Kharagpur in Orissa will not only be restored but will be taken full throttle forward and fructified into a full sister IIT of IIT, Kharagpur.

We are shocked to hear recently in Decmeber the following:

19th December 2006: (Various News reports)

The government will set up the eighth Indian Institute of Technology (IIT) in Andhra Pradesh, Chief Minister Y.S. Rajasekhara Reddy announced in the state assembly Tuesday.

20th December 2006 (News reports)
http://timesofindia.indiatimes.com/NEWS/India/IITs_to_come_up_in_Bihar_Andhra_and_Rajasthan/articleshow/870671.cms

With the Union human resource development ministry approval, the path has been cleared for the setting up of three more Indian Institutes of Technology (IITs) — in Rajasthan, Bihar and Andhra Pradesh. At present there are seven IITs in the country — in New Delhi, Mumbai, Kharagpur, Kanpur, Roorkee, Chennai and Guwahati.

Because earlier we had the following news:

11th Plan: News reports say they will have establishment of three
new IITs http://economictimes.indiatimes.com/articleshow/459579.cms

Each new IITs: At a cost of Rs 4000 crores over six years.
http://economictimes.indiatimes.com/articleshow/459579.cms

28th August 2006:
http://timesofindia.indiatimes.com/articleshow/1933613.cms

"... The announcements were made by Union minister of state for HRD MAA Fatmi at the inaugural ceremony of a new experiment of the National Institute of Open Schooling (NIOS) called "On Demand Examination" here on Monday.

Fatmi said, "The proposal for one IIT for Bihar and two for Orissa and one Western Indian state besides one IIIT to Bihar will be
included in 11th Five Year Plan". ...

Additionally, during a visit to BBSR the Director of IIT, Kharagpur, had, (obviously at the GOI's concurrence), announced expanding the BBSR extension center into a full fledged branch of IIT, Kharagpur. This branch in due course was envisioned to emerge as a full IIT.

Dear Prime Minister, you can well understand our anguish, when after promising 2 IITs you give us to NONE?? This is unconscionable and unacceptable.

We urge you to reconsider your decision and undo the wrong done to Orissa and it's people.

Why SIR, is YOUR Government rubbing the Orissa's civil society's patience and sense of dignity, time and again?

You know how a sanctioned IISER was relocated out of Orissa last year to KOLKATA. The resultant public resentment/hue and cry, was taken cognizance of by YOUR Government. Consequently, the NISER foundation stone was laid by YOU, SIR during rain ruined visit of YOURS, in August, 2006. We were very pleased indeed.

But now it is turning out a palliative. The NISER, a 700 crore institution, is on it's way – but the highway rubbers of the HRD ministry have again undermined Orissa, and robbed it of two sanctioned IITs, worth in the vicinity of 8000 crores. Thus unexpectedly and shockingly now they have decided to derail one (IIT, KGP's BBSR Branch) and relocate the other, to Andhra Pradesh.

Don't you think these kinds of acts of central Government, hinder the forces of National Integration?

We do not want to over again harp on to the details of the HRD Ministry's mal-distribution of resources across India, which you as the past Deputy Chair of the planning commission, and present Chair, are well aware. This has lead to unequal development and massive discontent, time and again and year after year.

To give just one example: 2006-07 budget: MHRD is scheduled to spend Rs 4.07 on HRD-NH (HRD ministry funded higher education institutions plus institutions of national importance) per person in Orissa, where as it will spend Rs 183.08 in Delhi. The figures (published by GOI) make my point, so I don't have to.

Thus we urge you Sir not to loose sight of this gross indiscretion, of robbing the poor to pamper the rich policy of GOI's HRD ministry. We appeal to you to take corrective actions and do what is RIGHT. If you do this will reward and encourage, civil actions and behavior by the civil society of Orissa and else where.

Best wishes,
Sandip