A DISSERTATION REPORT ON “COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE TO SBI,PNB AND HSBC”
SUBMITTED BY:
SAURABH SHUKLA SEMESTER: MBA IVth ENROLLMENT NUMBER: 040387008219
INSTITUTE OF TECHNOLOGY AND SCIENCE MOHAN NAGAR GHAZIABAD 201007 U.P BATCH (2004-2006)
Declaration by the Candidate
I SAURABH SHUKLA student of MBA IV of Institute of Technology & Science
(I.T.S),
Ghaziabad
(2004-06)
bearing
enrollment
number
040387008219 hereby declare that the research project report titled COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE TO STATE BANK OF INDIA (SBI), PUNJAB NATIONAL BANK (PNB) AND HSBC. Is the outcome of my own work and same has not been submitted to any university/ institutions for the award of any degree or any professional diploma.
Date:
(
) Sign of candidate
ACKNOWLEDGEMENT
It has been a great learning experience on this project entitled “Comparative Study Of Education Loan With Reference TO SBI, PNB, And HSBC”.
I would like to thank Prof. Girish Jain for imparting knowledge and guidance to me in the field of Finance.
I would like to thanks Prof. Asif Haleem for his able guidance and support through out my project completion.
Table of Content 1.
Introduction of Education Loan
2.
Research Methodology
3.
PNB Education Loan Scheme
4.
SBI Education Loan Scheme
5.
HSBC Education Loan Scheme
6.
Findings
7.
Conclusion
8.
Recommendations
9.
Appendix
10.
Bibliography
INTRODUCTION
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 the resources to finance their education. You certainly can’t 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. 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 your personal 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. 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 can’t be. Now, you don’t have to take the road in front of you. Make your own road with education loans.
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY
PROJECT TITLE: “Comparative Study of Education Loan with Reference to PNB, SBI and HSBC”.
To compare education loan schemes & policies of the Punjab National Bank (PNB), State Bank of India (SBI) and Hong-Kong Shanghai Banking Corporation (HSBC)
METHODOLOGY: In this research I have adopt the Exploratory Research method only for PNB, SBI and HSBC Education loan schemes for just compare the offer document of these three banks.
DATA SOURSE: 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 information published in newspapers and from the banks websites and other related websites.
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).
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. • Expenditure on research • Some banks are not provided their internal information/circular.
PUNJAB NATIONAL BANK (PNB) EDUCATION LOAN SCHEAMES
“VIDYA LAKSHYAPURTI – EDUCATION LOAN SCHEME”
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.
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. • 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. • 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.
QUANTUM OF FINANCE
Need based finance, subject to repaying capacity of the parents / students with margin and the following ceilings :-
4.
•
Studies in India
-
Maximum Rs. 7.50 lacs.
•
Studies abroad
-
Maximum Rs. 15.00 lacs.
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 when disbursements are made on a pro-rata basis.
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 (atleast equal to loan amount) or co-obligation of parents / guardian / third party alongwith assignment of future income of the student for payment of instalment 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 instalments (stands included in the Agreement).
NOTE :
The document should be executed by both 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.
• 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.
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.
7.
LONING 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.
8.
REPAYMENT
Repayment Holiday / Moratorium
Course period + 1 year OR 6 months after getting job, whichever is earlier. -
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 Instalments (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. 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.
10.
UPFRONT FEE NIL
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.
12.
CAPABILITY CERTIFICATE
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.
13.
LOAN APPLICATION Form No. PNB 813.
14.
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 borrower’s 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 instalment. 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 borrower’s 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.
15.
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
16. i)
: Form No. PNB 905 /282(C).
DOCUMENTATION 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.
17.
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 Incharge will permit drawing on the borrower’s account within the limit fixed. This will also enable the Incumbent In charge to remain in close touch with the borrowing students’s 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.
In case of , purchase of stationary and books, loan may be disbursed in cash on declaration by the applicant and production of bills.
18.
CLASSIFICATION
Advances allowed under the Scheme will be classified under Priority Sector.
19.
CHECK LIST
To facilitate expeditious disposal of applications, a check-list regarding documents, security etc. alongwith 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 Bank’s 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 :
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.
20.
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 Incharge 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 instalment, due date of instalment etc.
21.
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 confirming that no loans are availed from banks.
STATE BANK OF INDIA (SBI) EDUCATION LOAN SCHEAMES
SBI EDUCATION LOAN A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.
ELIGIBLE COURSES
1.
All courses having employment prospects are eligible. •
Graduation courses/ Post graduation courses/ Professional courses
•
Other courses approved by UGC/Government/AICTE etc.
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/-
Any other expenses required to complete the course like study tours, project work etc.
3.
AMOUNT OF LOAN •
For studies in India, maximum Rs. 10 lacs
•
Studies abroad, maximum Rs. 20 lacs
4.
INTEREST RATE
For loans upto Rs. 4 lakh 10.50% p.a.
For loans above Rs. 4 lakh 11.50% p.a.
PROCESSING FEES
5.
•
No processing fee/ upfront charges
•
Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in the margin money
6.
REPAYMENT TENURE
Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.
Repayment Period Place of Study
Loan Amount in Years
In India
Abroad
Up to Rs. 7.5 lacs
5-7
Above Rs. 7.5 lacs
5-10
Up to Rs. 15 lacs
5-7
Above Rs. 15 lacs
5-10
Security Amount Studies In India Upto Rs. 4 lacs No Security Above Rs. 4 lacs to Rs. 7.50 Third Party Guarantee lacs Above Rs. 7.50 lacs to Rs. 10 Tangible Collateral
Studies Abroad No Security
lacs(India)/ Rs. 15
security for full value
suitable value of loan or third
lacs(Abroad)
of loan
party guarantee Tangible Collateral security for
Rs 15 lacs to Rs. 20 lacs
Third Party Guarantee Tangible Collateral security of
___ full value of loan
7.
MARGIN
For loans up to Rs.4.0 lacs : No Margin •
8.
For loans above Rs.4.0 lacs: o
Studies in India: 5%
o
Studies Abroad: 15%
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
•
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)
* Conditions Apply
EDUCATION LOAN SCHEME FOR STUDENTS OF ISB
Loan amount
Upto 95% of all costs upto 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 Rate of Interest
5%
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 midway through 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 loan.
Interest is calculated on daily reducing balance.EMI of 9 years & 9 months
Repayment
Up to 10 years. A customised repayment schedule taking into account individual repayment capacity of the student is permissible.
Moratorium Period
Up 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 except where mortgage
of immovable property is to be created. Processing Fees/ Prepayment Nil. ChargesForeclosure Charges Takeover of Education Loan Permissible from other Banks/ Financial Institutions for existing students and alumni Contact Branch
Hyderabad 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
ii. iii.
in India. Copies of letter conferring scholarship, freeship, studentship etc. 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 slip showing all deductions. ii. Employment details for the last 5 years. iii. Latest TDS Certificate – Form 16. 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
HSBC EDUCATION LOAN SCHEAMES
FEATURES AND BENEFITS Get financial flexibility with HSBC educational loans
LOAN AVAILABILITY 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*.
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).
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.
LOW INTEREST RATES Bank offer you competitive interest rates on your educational loans. Bank also give 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
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.
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 recognised college/university
in India or abroad* * 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. 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.
FINDINGS
FINDINGS Sl. No.
Parameter
Private Banks
Public Banks
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
1
Max. loan for studies in India
Rs. 7.50 Lacs
Rs. 10.00 Lacs
2
Max. loan for studies in Abroad Interest Rates
Rs. 15.00 Lacs
Rs. 20.00 Lacs
3
Upto Rs.4.00 lacs PTLR Above Rs.4.00 lacs PTLR + 1%
HSBC Min. Rs. 50,000 to a Max. of Rs. 25,00,000 Not Available
Upto Rs. 4 lakh 9.5% p.a + 10.50% p.a. 10% service Above Rs. 4 lakh tax + 2% 11.50% p.a. education
cess 4
Repayment Period starts from
one year after completion of course or 6 months after securing a job, whichever is earlier.
one year after completion of course Not Available 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 -510 years In Abroad : Up to Rs. 15 lacs – 5-7 years Above Rs. 15 lacs – 510 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 Upto Rs. 4.00 lacs : Nil : Nil Above Rs. 4.00 lacs: Above Rs. 4.00 lacs: Studies in India Studies in India 5% 5% Studies in Studies in Abroad 15% Abroad 15%
Not Available
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 Upto Rs. 4.00 Not Available lacs : No Security lacs : No Security Above Rs. 4.00 lacs : Above Rs. 4.00 lacs to Collateral Rs. 7.50 lacs : Security of Suitable Third Party value Guarantee (equivalent to 100% Above Rs. 7.50 lacs to of the amount of Rs. 10 lacs(India) : loan) Tangible Collateral or co-obligation of security for full value parents / guardian / of loan third Above Rs. 7.50 lacs to party. 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
CONCLUSION
Conclusion 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 vary 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
RECOMMENDATIONS
RECOMMENDATIONS • Banks should go for advertisement Campaign from Scratch. • Banks should try to cash its brand image. • Strong branch network should be made and staff personnel’s 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 Pamphlet’s 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.
APPENDIX
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
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 computersessential 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.
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 form 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 instalments 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.
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 day, month and year first mentioned above.
__________________________ BORROWERS FOR PUNJAB NATIONAL BANK
(Authorized signatory)
(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 B)
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:
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. 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 form 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 of Sh./ Kumari__________________________ BORROWERS FOR PUNJAB NATIONAL BANK (Authorized signatory)
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 favour 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 favour 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:-_______________________
EDUCATIONAL LOAN APPLICATION FORM FOR HSBC First Name Middle Name Last Name Address City Telephone Mobile Email Date of Birth Convenient time to contact you Between
and
Are you interested in a free session on overseas studies with an Educational Counsellor Details of the Educational Institute you are planning to study at : Name Country Are you an existing HSBC customer? If yes, please provide us the Card No or Account No Account No. Credit Card No.
BIBILIOGRAPHY
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
•
www.hsbc.com
