Any restructured loan has to be reckoned non-performing, according to 
the RBI rule. In 2008-09, during the global financial crisis, RBI allowed 
banks a one-time dispensation in which restructured loans could be 
considered standard assets.The move was aimed at providing support 
to genuine borrowers facing a cash flow problem because of the global 
downturn.
Given the unsecured nature of most study loans, RBI is not comfortable 
with the idea of a special dispensation here, bankers said.
According to estimates from bankers to the Union finance ministry, NPAs 
had risen above two per cent of the educational loan portfolio, which is about 
Rs 40,000 crore, as on March 31. Banks fear this would rise. These loans 
were an insignificant figure before 2004-05, when a set of more liberal rules 
gave these a boost.
In the educational loan scheme, it is possible to borrow up to Rs 10 lakh for 
domestic education and Rs 20 lakh for studying in foreign colleges. Borrowers 
need not pay during the tenure of the course plus a year after. The repayment 
period is five to seven years.
In addition, for loans up to Rs 4 lakh, banks cannot ask for any collateral. This 
particular clause is thought by bankers to have made loans more prone to turn 
sour.
Banks may extend the repayment period. "If a candidate takes a Rs 5 lakh 
loan, for example, it may not be possible to repay in five years. Hence, there 
is a thinking to increase the repayment tenure," said a bank official with a 
public sector bank. The repayment period may get extended to 10-15 years, 
as compared to five to seven years now.
In the segment, State Bank of India (SBI) is the largest, with around 25 per 
cent of the study loan market. It had Rs 8,900 crore of such loans on March 
31, growth of 35 per cent over the previous year.
Banks had earlier requested the government to create a credit guarantee 
fund for educational loans, on the lines of the Credit Guarantee Fund Trust 
for Micro and Small Enterprises (CGTMSE), jointly set up by the government 
and Small Industries Development Bank of India (Sidbi). CGTMSE, in which 
80 per cent was contributed 
by the government and the rest by Sidbi, provides credit guarantees to banks 
and other financial institutions for facilitating collateral-free lending to medium 
and small enterprises.