Banks turn to Facebook
and Twitter to keep track of education loan takers
NEW DELHI: Be careful
of friends and followers. Some banks have started using Facebook and Twitter to
try and keep track of students who have taken education loans from them,
casting a wider net to keep defaults in check.
When payments are
delayed, these banks use information available on social networking websites to
track down customers and get in touch with them with the help of local branch
staffers. In some cases, banks may even be able to send or post reminder
messages to them through such websites.
State-run banks have
over 2.6 million education loan accounts with outstanding credit of about Rs
60,000 crore, according to government data.
The industry estimates
that 5-6 per cent of these loans have turned bad. The government is yet to set
up a credit guarantee fund for education loans. Central Bank of India, the top
provider of education loans to the Indian Institutes of Management last year,
has switched to keeping a tab on borrowers through social networking websites,
a senior official with the bank told ET.
"Earlier, we used
to track them through their alumni forums. But now that most students have a
presence on social networking websites, it is easier to track their footprints
online," said KK Taneja, field general manager with the bank. He declined
to provide more details.
Facebook, the world's
largest social network, is estimated to have more than 100 million users in
India. Those on social networks sometimes restrict access to personal
information to friends or people they know.
Under the Indian Banks Association's model educational loan scheme, collateral
is waived for all loans up to Rs 4 lakh, while those above Rs 7.5 lakh need
tangible security and have to be taken jointly with the parents. However, in
case of a default, banks have little recourse to recover the money, apart from
filing a case. Some banks track education loan defaulters through their online
friends. "So, if from the same batch there are four account holders and
two of them are defaulters we can track them through their batch mates' friend
list," said a senior manager with a state-run lender based in north India.
Banks also find social
networking websites useful to stay in touch with education loan customers who
have moved abroad. A senior manager with a private bank said most students from
top institutes often go overseas within a year or two of placement. "Some
of these are marquee clients for us. We stay in touch with them through
all possible avenues. We also offer them other services from the bouquet of
products that we have," said a senior manager with a private bank.
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