Implementation of the new policy and introducing new ₹500 and ₹2,000 bank notes into circulation has put a strain on banks resulting in delays in processing education bank loans for overseas study.
The backlog on granting loans affects students who are planning to enrol in an Australian university next month, according to AAERI.
According to the association, up to three quarters of students choosing to study in Australia take out education loans to pay for the first semester’s tuition fees.
“This has slowed down the process for bank loan sanctioning”
In each intake, there are approximately 12,000 to 14,000 Indian applicants who apply for the Australian visa, said Rahul Gandhi, president of AAERI.
“This will impact [a minimum of] 4,000 applicants,” Gandhi told The PIE News.
AAERI, which has around 100 members, has sent a list of preferred education providers in Australia to the Indian Banking Association, in a bid to speed up education loan processing.
The list consists of 43 universities, including Macquarie University, James Cook University, and the Australian campus of University College London.
The Australian Department of Education and Training has also provided a letter to help define whether an education provider can offer Australian higher education qualifications and if these providers and their courses can be offered to international students.
Ravi Lochan Singh, managing director of Global Reach, said Indian banks have been “overworked” in the last few months as a result of the currency change.
“This has slowed down the process for bank loan sanctioning,” he said. “I expect this to delay the process a little.”
Gandhi said in addition to the delays, the falling value of property in the country will also affect the loans students receive.
“This will impact the students availing the education loans, as they are secured loans against the valuation of the property, and the income of the parents/sponsors,” he told The PIE News.
The demonetisation was announced suddenly on November 8 last year. Education agencies in the country have already expressed their concern over the possibility of the outbound market being affected over the short term.
Singh predicted that initial repercussions may be seen for the coming six months.
“Northern hemispherical intakes for US and UK and Canada will not be impacted, as they are primarily having students commence in the second half of the year,” he said.
Australian institutions are aware of the potential impact and some have been flexible with fee payment deadlines and allowing later start dates, he added.
“There was a very small decline in the applications lodged by Indian citizens outside of Australia in December”
Universities Australia, the representative body for universities in the country, noted that its member universities have not reported any major issues up to now as a result of the demonetisation.
“Our best information is that there was a very small decline in the applications lodged by Indian citizens outside of Australia in December,” said Catriona Jackson, deputy chief executive of Universities Australia. “But this appears to have been reversed with an increase in applications during January.”
“We want to reassure Indian students that both our universities and our national government have signalled they will make every effort to accommodate the needs of students applying during the peak period,” she added.
“Students need to note, however, that their complete visa applications must be lodged at least four weeks before their courses are due to start.”
Pushpinder Bhatia, managing director of PAC Asia, said while there may be a short-term impact on students, he’s confident in “growth after demonetisation as this will eventually allow banks to give education loans on lesser interest rates which might just boost international students market from India.”
Agencies agree the short-term drawbacks are expected to be outweighed by the long-term benefits of demonetisation. “India is in a transitioning stage from the cash economy to a digital economy,” commented Gandhi. “The long term benefits are more than the short-term loss.”