The Indian Banks' Association (IBA) has urged the banks in the country to have stricter rules for approving loans to students who get admission under the management quota.

"Any loan considered by banks for students getting admission under the management quota would be outside the model scheme. Banks may fix appropriate terms and conditions for such loans," IBA said.

The IBA has expressed concerns that loans given to such students handed out under the model education loan scheme could become bad. Experts have been warning that Non-performing assets in education loans might increase in the coming future.

Banks in the country are urging individual borrowers to secure their loans by purchasing insurance policies amid growing concerns that non-performing assets (NPAs) are likely to increase in the country.

The country’s banks have enjoyed lower levels of NPAs. However, there are growing concerns that many borrowers might be unable to replay loans in the coming months. According to banking officials, both public and private sector banks are convincing their customers to buy policies to cover their personal loans and overdraft facilities.

According to the latest data from the to Reserve Bank of India (RBI), outstanding personal loans amounted to Rs 12,817 crore at the end of December 2011. This figure is exclusive of housing, consumer durables, credit cards.