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Indian students who fled war-torn Ukraine now wary of loan repayments

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The Indian students who managed to get out of Ukraine are now facing a financial burden over repayment of education loans.

Thousands of Indian students fled Ukraine after Russian President Vladimir Putin declared war on the nation. But even as they somehow managed to evacuate from the war-torn nation, the students who were pursuing higher studies in Ukraine are now staring at an unprecedented financial burden, with loan repayment an immediate worry.

According to the Ministry of External Affairs, around 22,500 Indian nationals, mostly students, have returned from Ukraine to India since 1 February 2022. The government provided all possible assistance in terms of shelter, food and medical attention to displaced Indians who crossed over to the western neighbours of Ukraine. They were eventually evacuated through flights operated under Operation Ganga.

However, a safe return to their homes has not ended the worries for the Indian students. The government says that as per information received from public sector banks and 21 private sector banks, the Indian Banks’ Association, as on 31 December 2021, a little more than 1,300 students had availed education loans to pursue education in Ukraine.

The outstanding education loan balance against 1319 students stands at Rs 121.61 crore.

The government says that the current situation is fluid, adding that the implications of the ongoing conflict can be assessed and remedial steps considered only once the situation has stabilised.

Meanwhile, Indian students who returned home from war-ravaged Ukraine are a harried lot after their studies were disrupted due to the conflict. It is an anxious situation for those who have to pay off their education loans.

If a quick decision doesn’t come, then for delayed repayment of loans, these students may have to face penalties, which would further impact their credit rating for future loans, as well as adversely influence their job placement opportunities.

While lending banks are said to be “assessing the impact of the crisis on repayment of education loans”, the government has asked the Indian Banks’ Association to assess the impact of the conflict on outstanding education loans of the returnee students and to initiate stakeholder consultations in this regard.

What makes the situation tricky is that the student loan agreements do not have provisions for relief due to war, unlike such reliefs provided by life insurance policies.

Meanwhile, the banks, which are bound by the agreement and concerned over their balance sheets, have one clear principle – what has been borrowed needs to be repaid, one way or the other.

In case a student defaults on the repayment obligation, the multiple costs could include penalty, credit score hit, and forfeiture of collateral.

Banks and lenders have options like restructuring loans, extending repayment tenure or even offering a longer loan moratorium on a case-by-case basis. But this means each student may be forced to pursue individual remedial measures, provided the banks or the government doesn’t take a stand for all of them.

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