Education Loan With Reference to SBI, PNB & HSBC

7/30/2019 Education Loan With Reference to SBI, PNB & HSBC

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Project Report On

Comparative Study of Education Loan With

Reference To SBI, PNB & HSBC

CHAPTER 1

INTRODUCTION

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CHAPTER-1

INTRODUCTION

Education loans can augment the boundaries of what you can achieve

Education never ends it is not said without reason. We are educated all our lives and

getting an education not only is a great achievement but something that gives you the

tools to find your own way in the world. Education is indispensable; little do we realize

how much more it can bring to us in terms of worldly amplifications. Anyone can have

propensity and the natural endowment for education. But one might not have theresources to finance their education. You certainly cant let lack of resources impede

you from advancing your prospects through education. Then you accidentally stumble

upon the word education loans. Loans for education you have never thought about it

as a feasible arrangement. Education loans can open newer panoramas in regard to your

education aspirations.

Education loans are open to all people in all its myriad forms. Education loans can

realize your education plans or the education plans of your children. You can

strengthen you own future and the future of your son or daughter with education loans.

An extensive range of student and parent loans are presented under the category of

education loans. There are many types of education loans. Discerning about the types

of education loans will help you in making the accurate decision. The single largest

resource of education loans is federal loan. The two main federal education loan

programs are the Federal Family Education Loan Program and the Federal Direct Loan

Program. In the Federal Family Education Loan Program the bank, credit union or the

school is the lender. While the federal direct loans program, the department of

education is the lender.

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Private education loans are offered to people so that they can provide financial backup

to their education plans. Private education loans are not endorsed by other government

agencies but are provided by other financial institutions. Private education loans

program are optimum for both undergraduate and graduate studies.

Formal education is requisite for future success. Though this is not a hard and fast rule,

but education certainly helps you in gaining an upper hand. With universities getting

expensive by each day an education loan will certainly give you an incentive to go

ahead with your education plans. Each year while contemplating on your education

plans the thought of finances almost invariably comes in. While working towards you

degree, you are constantly plagued about paying for the education fees, books, and

other living expenses. Education loans can provide funding for tuition fees, board and

room, books computer, and even student travel. An education loan can help you with

all these expenses. Education loans are sufficient enough to take care of all these

expenses. If you have been forced to drop your education for any reason, you can still

take up your education at any point of time. Irrespective of your age and also where

you have left your education.

There are no specific eligibility criteria for education loans. Any person who is in need

of sponsorship for education can find an education loan that befits his or her financial

necessity. Loan amount on education loans vary with the kind of education you want to

pursue. The repayment options with education loans will similarly accommodate yourpersonal financial preferences. You can either repay interest amount while still in

school or six months after graduation. Education loans offer up to ten years for

repayments. The refund alternatives on education loans also include deferment,

forbearance and consolidation. The various sites on education loans can give you

innumerable repayment options and monetary remuneration.

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Education loans will help you in planning your life after graduation. However, an

education loan like every loan is a huge financial obligation. An education loans is

generally the first substantial loan for most people and therefore the first major

expense. Do not be completely dependent on your education loans for the funding of

your complete education. Try to apply for any other financial sustenance like university

grants, scholarships, fellowships, work study programs and assistance ship and any

other form of aid. This will certainly encourage a fluid dispensation of your education

loans. You can start by going to the financial aid office in your school or university. It

will provide you further insight to the kind of education loans, you must apply for.

Education is an experience of life. It is so rewarding in itself that it helps you to manage

almost everything in your life. Education loans discipline your impulse towards

education and training into a fruitful contrivance. The payoff is delicious in terms of

improved quality of life. Education is expensive! Is it? With education loans it cant be.

Now, you dont have to take the road in front of you. Make your own road with

education loans.

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CHAPTER 2

REVIEW OF LITERATURE

AND

RESEARCH METHODOLOGY

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CHAPTER-2

2.1 Review Of Literature

There appears some difficulty for those candidates who have secured admission

to these courses in the management quota to professional colleges here to get

educational loans from the banks. When it comes to sanctioning educational

loans, there should be no discrimination to those who secure admission in the

management or merit quota," (Kerala Chief Minister Oommen Chandy NDTV

News weekly, 2011)

Borrowers who withdraw from school for whatever reason have higher default

rates, with default rates rising as the number of times withdrawn rises. In

addition, students who withdraw for administrative or academic reasons have

higher default rates than students who withdraw for work-related reasons

(Steiner and Teszler, 2003)

Not surprisingly, borrowers with high earnings after they leave school are less

likely to default than those with low earnings. This fact underlines the risk

students assume in taking out large loans and then entering low-paying careers.

But, in predicting default, this income variable was only half as strong as the

variables for unemployment or dropping out (Woo 2002)

Having an adequate disposable income is a necessary, but not sufficient,

condition for honoring the terms of a student loan. Low incomes increase default

risk, but many of those having the apparent ability to repay nevertheless choose

not to.(Flint, 1997)

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The education Loan scheme of SBI aims at fulfilling the financial needs of

deserving/ meritorious students for higher education in India and abroad. The

bank claims to lay emphasis on providing opportunity to every meritorious

student on affordable terms and conditions (State Bank of India (SBI)

Chairman Pratip Chaudhuri)

2.2 Objective Of The Study

To compare education loan schemes & policies of the Punjab National Bank (PNB),

State Bank of India (SBI) and Hong-Kong Shanghai Banking Corporation (HSBC)

2.3 Hypothesis

Education loan is gaining much importance in India

Education Loans provided by public sector banks are much beneficial than

private sector banks.

2.4 Methodology:

In this research I have adopted the Exploratory Research method only for PNB, SBI

and HSBC Education loan schemes for just compare the offer document of these three

banks.

2.5 Data Source:

Primary data is taken from various internal documents and circulars issued by the banks

from time to time and Secondary data is taken from different books and financial

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information published in newspapers and from the banks websites and other related

websites.

2.6 Scope:

Research scope is only three banks and these three banks are State Bank of India (SBI),

Punjab National Bank (PNB), and Hong-Kong Shanghai Banking Corporation (HSBC).

2.7 Limitations:

There are some limitations in this research; these limitations are as follows

Time limitation

Many banks provide education loan but in this research only three banks are

taken for consideration.

Some banks have not provided their internal information/circular.

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CHAPTER 3

PUNJAB NATIONAL BANK (PNB)

EDUCATION LOAN SCHEMES

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CHAPTER - 3

The education loan scheme provided by Punjab National bank is

Vidya Lakshyapurti Education Loan Scheme

3.1 Objective

To provide financial support to deserving / meritorious students for pursuing education

in India and abroad. The Scheme aims at providing financial assistance to meritorious

students with an opportunity including undertaking basic education and to the

meritorious students to pursue higher, professional and technical education.

3.2 Eligibility

2(i) Courses eligible

a. Studies in India

School Education including Plus 2 stage

Graduation courses B.A., B.Com. B.Sc., etc.

Post-Graduation courses: Masters & Ph.D.

Professional courses: Engineering, Medical, Agriculture, Veterinary, Law,

Dental, Management, Computer etc.

Computer Certificate courses of reputed institutes accredited to

Department of Electronics or institutes affiliated to University

Courses like ICWA, CA, CFA etc.

Courses conducted by IIM, IIT, IISc, XLRI, NIFT, etc.

Courses offered in India by reputed foreign University.

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Evening Courses of approved Institutes.

Other Courses leading to Diploma / Degree etc. conducted by Colleges /

Universities approved by UGC / Govt. / AICTE / AIBMS / ICMR etc.

Courses offered by National Institutes and other reputed Private Institutes.

b. Studies abroad

Graduation For job oriented professional / technical courses offered by

reputed universities. Credentials of the Educational Institution may be got

certified from authenticated sources / Embassy in India.

Post Graduation MCA, MBA, MS etc.

Courses conducted by CIMA London, CPA in USA etc.

2(ii) Student eligibility

Should be an Indian National

Secured admission to Professional / Technical courses through Entrance

Test / Selection process.

Secured admission to foreign University / Institutions.

Student should have secured pass marks in the qualifying Examination for

admission to Graduation Courses.

2(iii) Expenses considered for Loan Fee payable to Collage / School / Hostel.

Examination / Library / Laboratory fee.

Purchase of books / equipments / instruments / uniforms.

Caution Deposit / Building Fund / Refundable Deposit supported by

Institution Bills / Receipts.

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Travel Expenses / Passage money for studies abroad.

Purchase of computers essential for completion of the Course.

Any other expense required to complete the course like study tours,

project work, thesis, etc.

3.3 Quantum Of Finance

Need based finance, subject to repaying capacity of the parents / students with

margin and the following ceilings:-

Studies in India - Maximum Rs. 7.50 lacs.

Studies abroad - Maximum Rs. 15.00 lacs.

3.4 Margin

Upto Rs. 4.00 lacs : Nil

Above Rs. 4.00 lacs : Studies in India 5%

Studies in Abroad 15%

Scholarship / assistantship to be included in Margin.

Margin may be brought in on year-to-year basis as and whendisbursements are made on a pro-rata basis.

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3.5 Security

No Security may be insisted upon for loans upto Rs. 4.00 lacs. However, for loans

above Rs. 4.00 lacs, Collateral Security of Suitable value (at least equal to loan

amount) or co-obligation of parents / guardian / third party along with assignment of

future income of the student for payment of installment may be obtained viz., :-

Upto Rs. 4.00 lacs : No Security.

Above Rs. 4.00 lacs : Collateral Security of Suitable value

(equivalent to 100% of the amount of loan)

or co-obligation of parents / guardian / third

party.

In addition to above assignment of future income of the student for payment of

installments (stands included in the Agreement).

NOTE: The document should be executed by the student and the parent /

guardian.

The security can be in the form of land / building / Govt. Securities / Public

Sector Bonds / Units of UTI, NSC, KVP, LIC Policy, Gold, Shares / Debentures,

Bank Deposit in the name of the student parent / guardian or any other third party

with suitable Margin.

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Wherever the land / building is already mortgaged, the unencumbered portion

can be taken as security an II charge basis provided it covers the required Loan

amount.

In case the loan is given for purchase of Computer, the same to be Hypothecated

to the Bank.

3.6 Rate of Interest

Upto Rs.4.00 lacs PTLR

Above Rs.4.00 lacs PTLR + 1%

The interest to be debited monthly on simple basis during the Repayment

holiday / Moratorium period.

Penal interest @ 2% be charged for above Rs. 2.00 lacs for the overdue

amount and overdue period.

3.7Loaning Powers

As per loaning Power Chart in force from time to time : No application for

educational loan received should be rejected without the concurrence of the

next higher authority.

3.8 Repayment

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Repayment Holiday / Moratorium Course period + 1 year OR 6 months

after getting job, whichever is earlier.


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The loan is to be repaid in 5-7 years after commencement of repayment. If the student

is not able to complete the course within the scheduled time, extension of time for

completion of course may be permitted for a maximum period of 2 years. If the student

is not able to complete the course for reasons beyond his control, sanctioning authority

may at his discretion consider such extensions as may be deemed necessary to complete

the course.

The accrued interest during the repayment holiday period to be added to the

principal and repayment in Equated Monthly Installments (EMI) be fixed.

1% Interest concession may be provided by Incumbents to lonees if the

interest is serviced by them during the study period when repayment holiday

is specified for interest / repayment under the Scheme.

Interest concession is to be provided to borrowers only at the time of final

repayment of the loan.

3.9 Post Sanction Follow Up

Branches to contact college / university authorities to send the progress report

at regular intervals in respect of students who have availed loans

3.10 Upfront Fee

NIL

3.11 Time Norms

Loan applications have to be disposed of within a period of 15 days to one

Month but not exceeding the time norm stipulated for disposing of loan

Applications under Priority Sector Lending.

3.12Capability Certificate

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Since, some of the foreign universities require the students to submit a

certificate from their bankers about the sponsors solvency / financial

capability, with a view to ensure that the sponsors of the students going

abroad for higher studies are capable of meeting the expenses till completion

of studies, capability certificate may be issued in such cases. For this

financial and other supporting documents may be obtained from the applicant.

3.13 Mode Of Application Of Interest

Interest on Education Loan accounts shall be worked out at the end of each month and

recorded on a separate sheet in the ledger but not debited to the borrowers account.

Instead, it should be debited to a separate account opened in the Subsidiary General

ledger titled Interest Accrued on Advances under Education Loan Scheme forming

one of the components of the main head of General Ledger. Interest Accrued on

Advances and credited to Revenue Head Income Interest on term loan till the

commencement of repayment of first installment. On the date fixed for commencement

of repayment, the whole amount of interest so far worked out and recorded as above

should be debited to the borrowers account by corresponding credit to the Interest

Accrued on Advances under Education Loan Scheme. Repayment of loan and interest

may be determined keeping in view the above procedure for charging of interest.

3.14 Confidential Reports

On Borrower(s) : No confidential report on the borrower will be required as the

application for loan will indicate the information required to be furnished in the

confidential report.

On Guarantor(s) / Co-obligants : Form No. PNB 905 /282(C).

3.15 Documentation

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i) Agreement (Annexure -1) duly stamped, to be taken in case where the

student is minor. Further, in case of Minor student, on attaining his/her

majority confirmation from student be obtained as per Annexure III.

ii) Agreement (Annexure II) duly stamped, to be taken in case where the

student is Major.

iii) Letter of Guarantee (PNB 785) duly stamped as an Agreement to be taken

in case of loan amount is above Rs. 4 lacs.

iv) In case of collateral security is to be taken is mortgage, procedure given in

Book of Instruction on Loans to be followed.

The documents should be executed by the student and parent / guardian.

3.16 Disbursement

Education loan is to be disbursed in the form of term loan. A limit upto which

advance is to be allowed during each year will be set up. Each time the borrowing

scholar is in need of funds to pursue his studies; he will approach the lending office

and will explain his needs to the Incumbents In charge will permit drawing on the

borrowers account within the limit fixed. This will also enable the Incumbent In

charge to remain in close touch with the borrowing students activities.

The loan to be disbursed in stages as per the requirement / demand directly to

the Institutions / Vendors of Books / equipments / instruments to the extent

possible.

Loan to be sanctioned by the branch nearest to the place of domicile of the

student.

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In case of, purchase of stationary and books, loan may be disbursed in cash on

declaration by the applicant and production of bills.

3.17 Classification

Advances allowed under the Scheme will be classified under Priority Sector.

3.18 Check List

To facilitate expeditious disposal of applications, a check-list regarding documents,

security etc. Along with application forms for Education Loans be provided to

intending borrowers. An illustrative check-list enabling a ready reference, so that

intending borrowers can furnish all related documents / papers in one lot, is given

below :-

Loan application on Banks format.

Passport size photograph.

Proof of Address.

Proof of having secured pass marks in last qualifying examination.

Letter of admission in professional, technical or vocational courses.

Prospectus of the course wherein charges like Admission Fee, Examination

Fee, Hostel Charges etc. are mentioned.

Details of Assets & Liabilities of parents.

In case loan amount is above Rs. 4.00 lacs :

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Particulars of Guarantors and details of their Assets & Liabilities.

If immovable property offered as Collateral Security copy of Title Deed,

Valuation Certificate and Non-encumberance Certificate from approved

Lawyer of the Bank.

Photocopy of Passport & Visa, in case of study abroad.

Any other document / information, depending upon the case and purpose

of the loan.

3.19 Post Sanction Supervision

The Bank will reserve the right of giving loan under this Scheme to any scholar or

continue / discontinue the yearly disbursement to a borrower under the Scheme,

depending upon whether or not he / she shows good results at the institution he /she

has joined for studies and whether of not reports about his / her conduct are

satisfactory.

Such reports will be required to be produced to the Incumbents In charge of the

lending office before the start of each academic year subsequent to the first year.

Loan pass book (PNB589) be issued to the borrower containing details such as date

of sanction of loan, amount of loan, amount of loan sanctioned, subsidy received (if

any) rate of interest, amount due under each installment, due date of installment etc.

3.20 Other Conditions

Zonal Managers and above may consider relaxation with regard to Eligibility,

Margin and Security norms on merits of each case.

No Due Certificate need not be insisted upon as a pre-condition for considering

educational loan. However, Branches may obtain a declaration / an affidavit

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Confirming that no loans are availed from banks.

CHAPTER 4

STATE BANK OF INDIA (SBI)


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CHAPTER - 4

SBI EDUCATION LOAN is a term loan granted to Indian Nationals for

pursuing higher education in India or abroad where admission has been secured.

4.1EligibleCourses

All courses having employment prospects are eligible.

Graduation courses/ Post graduation courses/ Professional courses

Other courses approved by UGC/Government/AICTE etc.

4.2 Expenses Considered For Loan

Fees payable to college/school/hostel

Examination/Library/Laboratory fees

Purchase of Books/Equipment/Instruments/Uniforms

Caution Deposit/Building Fund/Refundable Deposit

Travel Expenses/Passage money for studies abroad

Purchase of computers considered necessary for completion of course

Cost of a Two-wheeler upto Rs. 50,000/-

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Any other expenses required to complete the course like study tours, project

work etc.

4.3 Amount of Loan

For studies in India, maximum Rs. 10 lacs

Studies abroad, maximum Rs. 20 lacs

4.4InterestRate

For loans upto Rs. 4 lakh 10.50% p.a

For loans above Rs. 4 lakh 11.50% p.a

4.5 Processing Fees

No processing fee/ upfront charges

Deposit of Rs. 5000/- for education loan for studies abroad which will be

adjusted in the margin money

4.6 Repayment Tenure

Repayment will commence one year after completion of course or 6 months after

securing a job, whichever is earlier.

Place of Study Loan AmountRepayment Period

in Years

In IndiaUp to Rs. 7.5 lacs 5-7

Above Rs. 7.5 lacs 5-10

Abroad Up to Rs. 15 lacs 5-7

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Above Rs. 15 lacs 5-10

Security

Amount Studies In India Studies Abroad

Upto Rs. 4 lacs No Security No Security

Above Rs. 4 lacs to Rs. 7.50

lacsThird Party Guarantee Third Party Guarantee

Above Rs. 7.50 lacs to Rs. 10

lacs(India)/ Rs. 15

lacs(Abroad)

Tangible Collateral

security for full value

of loan

Tangible Collateral security of

suitable value of loan or third

party guarantee

Rs 15 lacs to Rs. 20 lacs ___Tangible Collateral security for

full value of loan

4.7 Margin

For loans up to Rs.4.0 lacs: No Margin

For loans above Rs.4.0 lacs:

o Studies in India: 5%

o Studies Abroad: 15%

4.8 Documentation Required

Completed Education Loan Application Form.

Mark sheets of last qualifying examination

Proof of admission scholarship, studentship etc

Schedule of expenses for the specified course

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2 passport size photographs

Borrower's Bank account statement for the last six months

Income tax assessment order, of last 2 years

Brief statement of assets and liabilities, of the Co-borrower

Proof of Income (i.e. Salary slips/ Form 16 etc)

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4.9 Education Loan Scheme For Students Of Isb

Loan amount

Upto 95% of all costs up to a maximum of

Rs.14.50 lac. (Taking into account

expenditure of married students and cost of

a laptop, which is essential for students.)

Margin 5%

Rate of Interest 9% (Floating). EMI*: Rs.1287/-per

lac.

8.5% (Floating), if tangible security

equivalent to 50% of loan amount is

furnished. EMI*: Rs.1260/- per lac.

Should a tangible collateral security

equivalent to 50% of outstanding

loan amount be furnished midwaythrough the tenure of the loan, the

concession of 50 basis points in the

rate of interest shall become

applicable from the month following

the month in which such security is

furnished. Only Simple Interest will be

charged during the course and

moratorium period.

The rate of interest will not change

during the complete tenure of the

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loan.

Interest is calculated on daily

reducing balance. MI of 9 years & 9

months

RepaymentUp to 10 years. A customized repayment

schedule taking into account individual

repayment capacity of the student is

permissible.

Moratorium PeriodUp to 3 months after completion of course.

Co-borrower Yes. The loan will be granted jointly with

the parent/ guardian.

Security Lien on the original Certificate and

Marks Sheet of the student. The

Certificate will remain in custody of

SBI during the currency of the loan.

Third party guarantee (TPG),

preferably of earning sibling of the

student or a person known to the

Bank i.e., a person who is our

customer or he/she is a reputed

person or a guarantor of one of our

borrowers.

Application Processing Time Loans will be sanctioned and disbursed

within three days, after submission of

application form, complete in all respects

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except where mortgage of immovable

property is to be created.

Processing Fees/ Prepayment

Charges Foreclosure Charges

Nil.

Takeover of Education Loan from

other Banks/ Financial Institutions

for existing students and alumni

Permissible

Contact BranchHyderabad University Campus Branch,

Gachibowli, Hyderabad- 500019

Telephone: 040-23011301/289

Fax: 040-23011617

Documents to be enclosed

i. Mark sheet of last qualifying examination for school and graduate studies in

India.

ii. Copies of letter conferring scholarship, free ship, studentship etc.

iii. Documents evidencing the duration of course and commencement thereof

viz. prospectus or certificate from the competent authority of the institution.

iv. Proof of admission to the course.

v. Schedule of expenses for the course.

vi. Two copies of passport size photograph of the borrower(s) / guarantor(s).

vii. Statement of Bank account for the last six months of the borrower(s)

viii. Signature identification from bankers of borrower(s) guarantor(s).

ix. A copy of Passport/Voters ID Card/Proof of residence.

For salaried persons

i. Latest salary slips showing all deductions.

ii. Employment details for the last 5 years.

iii. Latest TDS Certificate Form 16.

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iv. Statement of assets and outstanding liabilities.

For Self-Employed/Professionals and Businessmen

Proof of income.

Income Tax/Wealth Tax (if applicable) assessment orders not more

than 2 years old.

Assets and Liabilities.

If Collateral Security is Mortgage of Landed Property

Original Sale Deed

Original receipt of payment made for registrar

Society share certificate

Non encumbrance or certificate from advocate

Valuation Report

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CHAPTER 5

HSBC


CHAPTER - 5The HSBC bank s education loan criteria are as under:

5.1 Features And Benefits

Get financial flexibility with HSBC educational loans

5.2 Loan Availability

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Educational loans are available for studies in India or abroad. Avail of loan

amounts ranging from a minimum of Rs. 50,000 to a maximum of Rs.

25,00,000*.

5.3 Smooth Repayment

Our Equated Monthly Installments (EMIs) scheme allows for easy

repayment and saves you from hassles.

Flexibility

Our loans are tailor-made to your needs. Opt for tenures up to 4 years for

unsecured loans and 7 years for secured loans (against security of a

residential property / shares).

5.4 Comprehensive Coverage

Educational loan also covers expenses for boarding and lodging.

HSBC banking benefits

Take advantage of HSBC's banking benefits; let us help you open a

Savings account or avail of a debit card.

5.5 LOW INTEREST RATES

Bank offer you competitive interest rates on your educational loans. Bank

also gives you the option of choosing between a fixed or floating rate of

interest (the floating rate option is available only in case of secured loans).

Special Relationship Discounts

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You are also eligible for special discounts exclusively designed for HSBC

customers (of 6 months or more).

Loans above Rs.500,000 are available against security of residential

property/shares. Loans to value ratio to be less than or equal to 50% of the

property valuation.

Loans available for study at select institutes, based on their accreditation.

The interest rate on your floating rate Home loan is linked to HSBC's

Mortgage Lending Rate (MLR) and any revision in the MLR would

impact your interest rate. The MLR is currently 9.5%.

Terms and conditions apply. All loans at the sole discretion of The

Hongkong and Shanghai Banking Corporation Limited, India. Loans

available for applicants and properties in and around the limits of cities

where HSBC has branches and is subject to change from time to time.

Please be advised that vide Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a

service tax of 10% + 2% education cess thereon will be applicable on our

fees and charges.

5.6 Eligibility

To qualify for an Educational Loan, the following criteria apply.

1. Applicant should be a resident Indian

2. Minimum net annual income of Rs 150,000 for secured loan and Rs

75,000 for unsecured loan

3. Student must have secured admission to a recognized college/university in

India or abroad*

* Loans available for study at select institutes, based on their accreditation

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The interest rate on your floating rate Home loan is linked to HSBC's Mortgage

Lending Rate (MLR) and any revision in the MLR would impact your interest

rate. The MLR is currently 9.5%.

Terms and conditions apply. All loans at the sole discretion of The Hong Kong

and Shanghai Banking Corporation Limited, India. Loans available for applicants

and properties in and around the limits of cities where HSBC has branches. Vide

Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a service tax of 10% + 2%

education cess thereon will be applicable on our fees and charges.

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CHAPTER 6

FINDINGS, SUGGESTIONS

ANDCONCLUSIONS

CHAPTER - 6

6.1 Findings

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The following are the findings of the above study:

SR. Parameter Private Banks Public Banks

No.

1. Beneficiaries Economically affluent economically weaker

Sections of society. Sections also.

2. Objective Commercial National and social

3. Aimed at Profit earning Not profit alone

4. Margin money Must Flexible

5. Security Necessary Less important

6. Interest rate High Reasonable

7. Attitude Rigid and strict Flexible and liberal

Sl.

No.

Basis of

Difference

PNB SBI HSBC

1 Max. loan for

studies in India

Rs. 7.50 Lacs Rs. 10.00 Lacs Min. Rs.

50,000 to a

Max. of Rs.

25,00,000

2 Max. loan for

studies in

Abroad

Rs. 15.00 Lacs Rs. 20.00 Lacs Not Available

3 Interest Rates Upto Rs.4.00 lacs

PTLR

Above Rs.4.00 lacs

PTLR + 1%

Upto Rs. 4 lakh

10.50% p.a.

Above Rs. 4 lakh

11.50% p.a.

9.5% p.a +

10% service

tax + 2%

education cess

4 Repayment

Period starts

One year after

completion of course

One year after

completion of course Not Available

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from or 6 months after

securing a job,

whichever is earlier?

or 6 months after

securing a job,

whichever is earlier?

5 Repayment

Period

To be repaid in 5-7

years after

commencement of

repayment

In India : Up to Rs.

7.5 lacs - 5-7 years

Above Rs. 7.5 lacs -5-

10 years

In Abroad : Up to Rs.15 lacs 5-7 years

Above Rs. 15 lacs 5-

10 years

Up to 4 years

for unsecured

loans and 7

years for

secured loans(against

security of a

residential

property /

shares).

6 Margin Upto Rs. 4.00 lacs

: Nil

Above Rs. 4.00 lacs:

Studies in India

5%

Studies in Abroad

15%

Upto Rs. 4.00 lacs

: Nil

Above Rs. 4.00 lacs:

Studies in India 5%

Studies in Abroad

15%

Not Available

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7 Processing Fees No processing

fee/upfront charges

No processing

fee/upfront charges

Deposit of Rs. 5000/-for education loan for

studies abroad which

will be adjusted in the

margin money

Not Available

8 Security Upto Rs. 4.00

lacs : No Security

Above Rs. 4.00

lacs :Collateral

Security of Suitable

value

(equivalent to 100%of the amount of

loan)

or co-obligation of

parents / guardian /

third

Party.

Upto Rs. 4.00lacs : No Security

Above Rs. 4.00 lacs to Rs.

7.50 lacs :Third Party

Guarantee

Above Rs. 7.50 lacs to Rs.

10 lacs(India) : Tangible

Collateral security for full

value of loan Above Rs.

7.50 lacs to Rs. 15

lacs(Abroad) Tangible

Collateral security of

suitable value of loan or

third party guarantee Rs

15 lacs to Rs. 20 lacs

(Abroad)Tangible

Collateral security for full

value of loan

Not Available

6.2 Conclusion

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On the basis of above findings and comparison among PNB, SBI and HSBC it is

clearly observe that public banks have more reach, variety and flexibility in their

education loan schemes whereas private banks uses some new concepts in their

offerings like tailor made repayment system.

Maximum loan for studies in India is ranging from Rs. 7.50 lacs to 10.00 lacs

and for studies in Abroad it is Rs. 15-20 lacs by public banks and in the case of

private banks, they provide minimum Rs. 50,000 to a maximum of Rs. 25,00,000

lacs.

Interest rates are varying from 9.5% to 11.5% p.a and PNB uses PTLR system.

All banks have same repayment facility i.e. one year after completion of course

or 6 months after securing a job, whichever is earlier.

Repayment period is also vary from 5-7 year after commencement of repayment

in the case of education loan is taken from public banks and it is 4-7 years on the

basis of unsecured and secured education loan taken from private banks.

Margin is same in PNB and SBI i.e.

Upto Rs. 4.00 lacs : Nil

Above Rs. 4.00 lacs : Studies in India 5%

Studies in Abroad 15%

PNB and SBI do not charge any processing fees but SBI takes Deposit of Rs.

5000/-for education loan for studies abroad which will be adjusted in the margin

money

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6.3 Suggestions

Banks should try to cash its brand image.

Banks should go for advertisement Campaign from Scratch.

Strong branch network should be made and staff personnels incentives

should be increased.

Banks should increase its product line in education loans.

Special scheme for non-professional students as well as for professional

students should be increased.

Banks should introduce some new model keeping in mind the loan suitable

for medium income group customer.

Presence of some famous personality in Advertisement or in Pamphlets

insuring better retention in the mind of customers.

In this age of information, the customer before taking loans collects all the

information about various brands. The banks should provide a combined

booklet of the product range in order to upgrade the knowledge of future

takings of loans.

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APPENDIX

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FOR PNB :

(To be taken in case where the student is Minor)

ANNEXURE I

AGREEMENT FOR EDUCATION LOAN

This Agreement is made at_____________on this_______day of _____20 __ between

Shri / Smt ____________________________, son / wife of Shri _________ ______

___ r/o ________ ________ ______ (hereinafter referred to as parent / guardian) Sh. /

Kumari _____________________ minor aged ________ years (date of birth

_________), S/o / D/o Sh./ Smt. ____________________ r/o

______________________________ (hereinafter referred to as student), represented

by his / her natural / court guardian Sh./ Smt. ____________________ (both parent /

guardian and student are collectively called the borrowers which expression shall

unless repugnant to context include his / her heirs, executors, administrators and

assigns) of the One Part and Punjab National Bank a body corporate constituted under

the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 having its

head office at 7, Bhikhaji Cama Place, New Delhi and amongst other a branch office at

_______ _______ ______ ______ (hereinafter called the bank which term shall

unless repugnant to context include its successors and assigns) of the Other Part.

WHEREAS

A) Sh. / Smt ___________________ (parent / guardian) represents that

his/ her ward Sh. / Kumari _________________(hereinafter called the

student) is desirous of pursuing / continuing his / her studies at

______________________ for a period of __________ but is unable to

do so due to paucity of funds.

AND

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B) The Borrowers have, with a view to receiving the financial assistance

for studies of his/her ward, applied to the bank for a loan of Rs.

____________(rupees_____________________) which the bank has

agreed to grant on terms and conditions herein arter appearing:

NOW THIS AGREEMENT WITNESSETH AS UNDER

1. The total amount of the loan amounting to Rs. __________ will be disbursed

by the bank to the borrowers as under :-

State the manner of disbursement

2. The amount of loan will be utilized by the borrowers only for the purpose of

persecuting studies of the student , such as payment of fees payable to

college / school/ hostel, examination / library laboratory fee , purchase of

books / equipment / instruments / uniform caution deposit / building fund

/refundable deposit / supported by the institution bills / receipts, travel

expenses / passage money for studies abroad, purchase of computers-essential

for completion of the course any other expenses required to complete the

course- like study tour project work, thesis etc.

3. At the end of each academic year, borrowers will produce a certificate from

the head of the institution at which the student is studying testifying the

results achieved by the student during and at the end of the year as well as

about his conduct. If the said certificate is not produced or the certificate

furnished for any year is not considered satisfactory the Bank will (in its

absolute discretion) have the right of stop giving any further financial

assistance to the borrower in terms of this agreement notwithstanding the fact

that the total amount of the loan as agreed to in paragraph above has not been

disbursed to him. The Bank will be entitled as its option to recall the loan

already, give together with the interested accrued thereon, by a demand in

writing.

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Applicable in case loan is above Rs. 4.00 lac

4. The borrowers will secure the loan by providing a suitable surety an unless he

has furnished the same he will not avail the loan or any part thereof.

5. The interest on the loan will be payable at the PTLR rate /_____% over the

PTLR with ________rest. Provided that the interest payable by the borrowers

shall be subject to change in interest rates made by RBI / Bank from time to

time.

(PTLR means Prime Term Lending Rate of the bank prescribe by the

bank from time to time. The PTLR as on date is ______% p.a.)

In the event of there not being any PTLR, the borrower agrees to pay interest

at the rate as prescribed by the bank.

6. Subject to what is provided in Para 3 above, the borrowers will repay the

loan together with interest accrued thereon by equal monthly installments in

_______ year after commencement of the repayment i.e. one year after the

course period or 6 months after getting job, whichever is earlier. The

extension of the repayment period, if the student is not able to complete the

course for reasons beyond his/her control, will be in the absolute discretion of

the Bank.

7. In the event of death of any of the borrowers, the bank shall be entitled not

only not to disburse further loan but also recall the outstanding under the loan

already disbursed, irrespective of the installments fixed.

8. The borrowers will, during the period of their indebtedness to the bank, keepthe Bank informed of the change in their address, vocation and income from

time to time.

9. The student-borrower under takes to remit and if need be, give instructions /

authorization to his / her employer to remit, the salary to the extent necessary

or even more , if the borrower so desires , to the account of the borrower.

In witness whereof the parties to these presents have set their hands on the

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day, month and year first mentioned above.

__________________________

BORROWERS

FOR PUNJAB NATIONAL BANK

(Authorized signatory)

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(To be taken in case where the student is Major)

ANNEXURE II

AGREEMENT FOR EDUCATION LOAN

This Agreement is made at_____________on this_______day of _____20 __ between

Shri / Smt / Km. ____________________________, son / daughter of Shri _________

______ ___ r/o ________ ________ ______ (hereinafter referred to as student) and

Sh. / Smt. _____________________ son / daughter of____________________ r/o

______________________________ (hereinafter referred to as parent), (parent and

student collectively hereinafter called the borrowers which expression shall unless

repugnant to context include their heirs, executors, administrators and assigns) of the

One Part and Punjab National Bank a body corporate constituted under the Banking

Companies (Acquisition & Transfer of Undertakings) Act, 1970 having its head office

at 7, Bhikhaji Cama Place, New Delhi and amongst other a branch office at _______

_______ ______ ______ (hereinafter called the bank which term shall unless

repugnant to context include its successors and assigns) of the Other Part.

WHEREAS

A) The Student and Parent (Borrowers) represents that Sh. / Kumari

_________________(student) is desirous of pursuing / continuing

his / her studies at ______________________ for a period of

__________ but is unable to do so due to paucity of funds.

AND

C) The Borrowers have, with a view to receiving the financial

assistance for his/her studied, applied to the bank for a loan of Rs.

____________(rupees_____________________) which the bank has

agreed to grant on terms and conditions herein arter appearing:

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NOW THIS AGREEMENT WITNESSETH AS UNDER

1. The total amount of the loan amounting to Rs. __________ will be disbursed by

the bank to the borrowers as under:-State the manner of disbursement

2. The amount of loan will be utilized by the borrowers only for the purpose of

persecuting studies of the student , such as payment of fees payable to college /

school/ hostel, examination / library laboratory fee , purchase of books /

equipment / instruments / uniform caution deposit / building fund /refundable

deposit / supported by the institution bills / receipts, travel expenses / passagemoney for studies abroad, purchase of computers-essential for completion of the

course any other expenses required to complete the course- like study tour

project work, thesis etc.

3. At the end of each academic year, borrowers will produce a certificate from the

head of the institution at which the student is studying testifying the results

achieved by the student during and at the end of the year as well as about his

conduct. If the said certificate is not produced or the certificate furnished for any

year is not considered satisfactory the Bank will (in its absolute discretion) have

the right of stop giving any further financial assistance to the borrower in terms

of this agreement notwithstanding the fact that the total amount of the loan as

agreed to in paragraph above has not been disbursed to him. The Bank will be

entitled as its option to recall the loan already, give together with the interested

accrued thereon, by a demand in writing.

Applicable in case loan is above Rs. 4.00 lac

4. The borrowers will secure the loan by providing a suitable surety an unless he

has furnished the same he will not avail the loan or any part thereof.

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5. The interest on the loan will be payable at the PTLR rate /_____% over the

PTLR with ________rest. Provided that the interest payable by the borrowers

shall be subject to change in interest rates made by RBI / Bank from time to time.

(PTLR means Prime Term Lending Rate of the bank prescribe by the

bank from time to time. The PTLR as on date is ______% p.a.)

In the event of there not being any PTLR, the borrower agrees to pay interest

at the rate as prescribed by the bank.

6. Subject to what is provided in Para 3 above, the borrowers will repay the loan

together with interest accrued thereon by equal monthly installments in _______

year after commencement of the repayment i.e. one year after the course period

or 6 months after getting job, whichever is earlier. The extension of the

repayment period, if the student is not able to complete the course for reasons

beyond his/her control, will be in the absolute discretion of the Bank.

7. In the event of death of any of the borrowers, the bank shall be entitled not only

not to disburse further loan but also recall the outstanding under the loan already

disbursed, irrespective of the installments fixed.

8. The borrowers will, during the period of their indebtedness to the bank, keep the

Bank informed of the change in their address, vocation and income from time to

time.

In witness whereof the parties to these presents have set their hands on the day,

month and year first mentioned above.

For self and as natural guardian/ guardian ofSh./ Kumari__________________________

BORROWERS

FOR PUNJAB NATIONAL BANK

(Authorized signatory)

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ANNEXURE-III

Date:_____________________

The Manager,

Punjab National Bank,

BO:___________________

Reg : My Education Loan For Rs._______

I write to confirm that you were pleased to grant Education Loan of Rs.____________

to me, represented by my guardian, Shri / Smt. _________________ for my education.

My said guardian executed the required loaning documents in your favor in

consideration of the said loan.

I inform you that I have attained majority on ______________ and request you to

disburse the remaining amount loan of Rs. _______________ to me out of the loan

agreed to be granted by you. I am already and willing to execute any further documents

in your favor for the said loan, if so required by you. I also confirm that the amount of

loan of Rs. ___________ already disbursed to my benefit and the same is binding on

me and I agree to repay the same with interest as agreed.

I further undertake that I will repay the loan amount granted by the bank for my

education, in terms of the agreement dated _______________ as executed by Shri /

Smt. ______________________, my parents / guardian representing me, interalia from

out of my future income and if need be, I will give instructions / authorization to my

employer to remit the salary to the extent necessary or even more.

I will keep the bank informed of my address and my profession / employment from

time to time.

Yours Faithfully

____________________

(Borrower)

Address:-_______________________

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EDUCATIONAL LOAN APPLICATION FORM FOR HSBC

First Name

Middle NameLast Name

Address

City Please Select

Telephone

Mobile

Email

Date of Birth --Day-- --Month-- --Year--

Convenient time to contact you

Between --Please select-- and--Please select--

Are you interested in a free session on overseas studies with an Educational

Counselor

Details of the Educational Institute you are planning to study at :

Name

Country

Are you an existing HSBC

customer?Yes --Please select--

If yes, please provide us the Card No or Account No

Account No.

Credit Card No.

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BIBILIOGRAPHY

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BIBILIOGRAPHY

Books:-

Indian Financial System and Commercial Banking , by IIBF

Mumbai (page no. 259)

Management of Indian Financial - R.L.Gupta

Websites:-

www.pnbindia.com

www.statebankofindia.com

http://www.hsbc.com/1/2/
http://www.pnbindia.com/http://www.statebankofindia.com/http://www.hsbc.com/1/2/http://www.pnbindia.com/http://www.statebankofindia.com/http://www.hsbc.com/1/2/