Data provided by the government in the parliament reveals that there has been a more than three-fold increase in the number of students availing loans from Public Sector Banks for study abroad during 2012-13 and 2021-22. During the same period, the amount of loans increased by more than 6-fold.
Except for the year 2020 which was hit by the COVID-19 pandemic, there has been an increasing trend of Indians travelling abroad for higher education. Our story based on the ‘Open Doors Report’ which conforms to this trend can be read here. Data provided in the recent response in parliament also supports the trend of the increasing number of Indians travelling overseas for education. In fact, the year 2022 recorded the highest number of Indians travelling abroad for purpose of study. Our analysis of these trends can be read here.
Better education and post-study opportunities, scholarships by foreign universities, increased awareness of study abroad opportunities, etc. are some of the factors influencing this trend. Another key factor is the availability of educational loans to study abroad. In this story, we look at the trends in loans for study abroad, focusing on education loans by Public Sector Banks (PSBs) in India.
More than 6-fold increase in the value of loans disbursed by PSBs for studying abroad
Responding to a question asked in Lok Sabha on 13 February 2023, the Government of India furnished details of the loans issued by PSBs for study abroad. The information is provided for 10 Public sector Banks (PSBs). As per these details, during the 10-year period from 2012-23 to 2021-22, around 4.61 lakh students were provided loans for study abroad. This amounts to a total of Rs. 39.26 thousand crores.
With the exception of the pandemic hit 2020-21, there is a year-on-year increase in these 10 years, in terms of the number of students as well as the total value of loans disbursed. In 2012-13, PSBs approved and issued loans to 20.37 thousand students. This increased to 26.76 thousand in the next year. Over the next few years, this increased consistently and peaked at 62.95 thousand in 2019-20, the year before the pandemic. However, during 2020-21, it fell to 51.78 thousand because of the pandemic. As highlighted in the earlier story, the number of Indians traveling abroad for study rebounded in 2021-22. This is also reflected in the number of students who took loans to study abroad, which increased to 69.89 thousand in 2021-22. In other words, the number of students who availed of loans for study abroad more than tripled in these 10 years.
The proportion of growth is higher in the case of the total value of loans disbursed for study abroad. In 2012-13, a total of Rs.1.18 thousand crores was lent by PSBs for purpose of studying abroad. After a year-on-year increase, Rs. 5.88 thousand crores were disbursed by PSB in the year prior to the pandemic i.e., 2019-20. In 2020-21, it fell to Rs. 4.5 thousand crores. However, in 2021-22, the total value of the loans is Rs. 7.58 thousand crores i.e., more than a 6-fold increase compared to the amount disbursed in 2012-13.
During this 10-year period, the average value of loans by PSBs has also increased. In 2012-13, the average was around Rs. 6 lakhs, which increased to around Rs.11 lakhs in 2021-22.
SBI has the major share of loans disbursed for Study Abroad
During 2021-22, out of the total value of Rs. 7.5 thousand crores lent by PSBs, nearly 47% is by State Bank of India. Even in terms of the number of students who availed loans for studying abroad, nearly 47% availed loans from SBI. Over the 10-year period between 2012-13 and 2021-22, SBI gradually increased its share in the total loans disbursed by PSBs for purpose of studying abroad.
In 2012-13, its share was around 32% which increased to 33% & 35% in the next two years. Over the last three years i.e., 2019-20 to 2021-22, the share is around 47%. This could also be because of the merger of associate banks in SBI. It also ought to be noted that apart from an increase in the share, SBI has also contributed to the exponential increase in the total value of loans disbursed by PSBs for this purpose.
Other banks which also have a sizeable share in the value of loans disbursed are the Bank of Baroda and Canara Bank. In 2021-22, the share of the Bank of Baroda was around 15%. In 2012-13, it was around 8%. After a fall in share in subsequent years, there is an increase in the last four years. Canara Bank’s share in 2022-23 is also around 15%. Unlike Bank of Baroda, Canara Banks has maintained this share from around 2013-14. These three banks are the key contributors to the increase in the number as well as the volume of loans provided for study abroad.
On the other hand, Punjab National Bank (PNB) has a different trend. In 2012-13, 40% of the loans disbursed for study abroad were by PNB. Over the years, there has been a gradual fall in its share. Up until 2017-18, there was an increase in the volume of loans disbursed despite a falling share. But since 2018-19, there was a steady decline, more so in recent years.
Union Bank of India increased its share from around 2% to 7.3% in these 10 years. The lending for purpose of studying abroad is lower in the case of other PSBs. In terms of the average value of loans, the highest is Bank of Maharashtra with around Rs. 14 lakhs on average. In 2021-22, the average lending of Bank of Baroda and Indian Bank is around Rs. 11 lakhs per student. In the case of SBI, it is Rs. 11 lakhs. The least is Bank of India with Rs. 6 lakhs, while for Central Bank of India and Punjab & Sind Bank, it is Rs.7 lakh. It is significant to note that, in 2012-13 & 2013-14, the Central Bank of India had the highest average value of loan per student with Rs. 19 lakhs, which was thrice the overall average.
Study Abroad loans make up 8% of the total number and 33% of the total value of Educational Loans in 2018-19
In a response provided in Lok Sabha in December 2019, the Government of India furnished the details of the total educational loans for the period 2014-15 to 2018-19. Information for later years is not available in the public domain.
In 2014-15, educational loans were disbursed to 6.82 lakh accounts by Public Sector Banks, the total value of which is Rs. 9.19 thousand crores. In comparison, the study abroad loans disbursed by PSBs was to 34.99 thousand students, accounting for 5% of the total educational loan accounts. When the value of the loan is considered, the study abroad loans have a higher share at around at around 27.3%, because of the higher average loan size. There is a year-on-year increase in the share as well as the amount of study abroad loans. By 2018-19, the share of study abroad loans of all educational loans increased to 7.9% in terms of the number of accounts and around 32.7% in terms of value.
The overall trend indicates an increase in the number and value of loans disbursed by PSBs for purpose of studying abroad. As data indicates, their share is also increasing compared to the overall educational loans. This also indicates an increasing preference for studying abroad, which is also supported by the number of students travelling abroad for study.