Professional Documents
Culture Documents
ON
COMPARIVE STDUY OF EDUCATION LOAN,
STATE BANK OF INDIA V/S PANJAB NATIONAL
BANK
BACHELOR OF COMMERCE
BANKING INSURANCE
SEMESTER VI (2013-2014)
SUBMITTED BY,
PRIYANKA RAMESH JAMBHALE
BI11-524
CERTIFICATE
Date
COURSE COORDINATOR
(Prof. _________)
INTERNAL EXAMINER
(Prof.__________)
PRINCIPAL
(Dr. Vaidehi Dapterdar)
EXTERNALEXAMINER
(Prof
.)
DECLARATION
SIGNATURE OF
STUDENT
ACKNOWLEDGEMENT
I WOULD LIKE TO THANK PROF Mrs. VAIDEHI DAPTRDAR. OUR
COORDINATOR WHO HAS HELPED ME TO KNOW THE CONCEPT
OFCOMPARITIVE STUDY OF EDUCATION LOAN, STATE
TO
MY
PROJECT
GUIDE
PROF.
MISS.
VAIDEHI
Comparative study of
education loan
V/S
INTRODUCTION
The IBA Model Educational Loan Scheme for pursuing higher studies in
India & Abroad was formulated initially in the year 2001 and modified
subsequently from time to time with the objective of facilitating pursuit of
higher studies by meritorious students. The focus was mainly on
technical and professional courses in recognised Colleges and
Universities. The vocational courses offered by ITIs, ITCs, Polytechnics
and other technical institutions / bodies were not covered in the Model
Educational Loan Scheme (some banks do provide loans for pursuing 3
year diploma courses offered by Polytechnic Institutes). However, in
view of the initiatives being taken by the Govt. of India in skill
development in recent years, a need was felt for providing institutional
funding for the students undergoing specialized skill development
programs in recognized institutions. The Government has estimated that
the country would require 10 to 15 million skilled workers every year to
support the development process. The initiatives being taken by the Govt.
are for setting up new training facilities, modernization of existing centres
and intensive faculty development. The Model Educational Loan
Scheme for Vocational Courses has been developed as an extension of
the existing Model Educational Loan Scheme for pursuing higher
education in India & Abroad, to support the national initiatives for skill
development.
Definition
2.
If the obstacle is cash, an education loan is the answer. The icing on this
cake is that such education loans not only cover the cost of the tuition fee
but also almost all the expenses involved in the pursuit of academics. You
just need a set of eminently gettable documents and a guarantor to set
yourself on the road to academia.
Qualification
Most college students in the United States qualify for federal student
loans. Students can borrow the same amount of money, at the same price,
regardless of their own income or their parents' income, regardless of their
expected future income, and regardless of their credit history. Only
students who have defaulted on federal student loans or have been
convicted of drug offenses are excluded.
The amount students can borrow each year depends on their education
level (undergraduate or graduate), and their status as dependent or
independent. Undergraduates may receive lower interest rates than
graduate students, but graduate students can typically borrow more per
year.
Private lenders may use different underwriting criteria, including income
level, parents' income level, and other financial considerations. Students
will generally only borrow from private lenders when they exhaust the
maximum borrowing limit under federal loans. Several scholars have
advocated eliminating the borrowing limit on federal loans and enabling
students to borrow according to their needs (tuition plus living expenses)
and thereby eliminating high-cost private loans
Repayment
Federal student loan interest rates are established by Congress and listed
in $ 20 U.S.C. $ 1087E (b). Because the interest rates are established by
Congress, interest rates are a political decision. The federal student loan
program currently runs a multibillion dollar "negative subsidy", or profit,
for the federal government. Some scholars have suggested that federal
student loan interest rates should be tailored to particular courses of study
and reflect the riskiness of those different courses of study. They have
also suggested that the program should be run at cost, or below cost,
because of the benefits an educated workforce provides to society-lower
burdens on public services, lower health costs, higher wages and tax
revenues and lower unemployment.
Repayment typically begins anywhere from six to twelve months after a
student leaves school, regardless of whether or not they complete their
degree program. In some cases, repayment begins if course load drops to
half time or less, so it is important to check the exact terms and conditions
of any student loan.
The student may have multiple options for extending the repayment
period, although an extension of the loan term will likely reduce the
monthly payment, it will also increase the amount of total interest paid on
the principle balance during the life of the loan. Extension options include
extended payment periods offered by the original lender and federal loan
consolidation. There are also other extension options including income
sensitive repayment plans and hardship deferments. Extensions and
consolidation will also add to the principal, many times unpaid interest
and penalties become capitalized.
The Master Promissory Note is an agreement between the lender and the
borrower that promises to repay the loan. It is a binding legal contract.
CRITICISM
Since 2001, India has seen a sharp rise in the number of banks providing
loans to students. There is no longer any need to shelve your plans for
studying in India or abroad if you are a deserving student. You need to be
enrolled in a university of repute or one that is sanctioned by the UGC/All
India Council of Technical Education or any government institute. Loans
usually depend on the chosen course, reputation of the institute, family
assets
and
past
academic
record.
A Comprehensive Educational Loan Scheme has been framed by the
University Grants Commission in association with the Reserve Bank of
India. Under this scheme, a deserving candidate
May get up to Rs. 7.5 lakhs as loan for studying in India and Rs. 15
lakhs for studying abroad.
Will not have to pay interests exceeding Prime Lending Rate for
loans up to Rs. 4 lakhs. For loans beyond Rs. 4 lakhs, the student
will have to pay PLR plus one percent. Banks will not ask for
collateral or guarantee either for loans up to 4 lakhs.
Can repay the loan over a span of 5 to 7 years with a grace period
of one year after the completion of studies.
Once you decide to apply for bank loans in India, here are a few points
you should note:
Bank of India
State Bank of India
Bank of Baroda
Dena Bank
HDFC Bank
Union Bank of India
7) UCO Bank and so many more banks are giving Educational Loans.
The list of bank provides education loan in abroad banks are:
1) Axis Bank
2) IDBI Bank
History of state bank of india
The roots of the State Bank of India lie in the first decade of 19th century,
when the Bank of Calcutta, later renamed the Bank of Bengal, was
established on 2 June 1806. The Bank of Bengal was one of three
Presidency banks, the other two being the Bank of Bombay (incorporated
on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843).
All three Presidency banks were incorporated as joint stock
companies and were the result of the royal charters. These three banks
received the exclusive right to issue paper currency till 1861 when with
the Paper Currency Act, the right was taken over by the Government of
India. The Presidency banks amalgamated on 27 January 1921, and the reorganised banking entity took as its name Imperial Bank of India. The
Imperial Bank of India remained a joint stock company but without
Government participation.
Pursuant to the provisions of the State Bank of India Act of 1955,
the Reserve Bank of India, which is India's central bank, acquired a
controlling interest in the Imperial Bank of India. On 1 July 1955, the
Imperial Bank of India became the State Bank of India. The government
of India recently acquired the Reserve Bank of India's stake in SBI so as
to remove any conflict of interest because the RBI is the country's
banking regulatory authority.
Eligible Courses
a. Studies in India:
b. Studies abroad:
Any other expenses required to complete the course like study tours,
project work etc.
Amount of Loan
Rate of Interest*
Processing Fees
Repayment Tenure
Repayment will commence one year after completion of course or 6
months after securing a job, whichever is earlier.
Maximum Loan
Limit
Repayment Period
Up to Rs. 4 Lacs
5-7 years
Above Rs. 4 Lacs and up 5-7 years
to Rs. 7.5 Lacs
Above Rs. 7.5 Lacs
Up to 12 years
Security
Particular
Up to Rs. 4 lacs
loan amount
Above Rs. 4 lacs
to Rs. 7.50 lacs
loan amount
Security
Only Parent/ Guardian as co-borrower
Parent/ Guardian as co-borrower and Collateral security in
the form of suitable third party guarantee*.
*Third Party Guarantee can be replaced with
Parent/Guardian as co-borrower provided the Gross Annual
Income of Parent/Guardian (co-borrower) as given in latest
Income Tax Return is 3 times of the loan amount.
Margin
Studies in India: 5%
Documentation
Required
Post Graduation Degree and Diploma courses like MCA, MBA, MS, etc
offered by reputed universities
Courses conducted by CIMA (Chartered Institute of Management
Accountants) -London, CPA(Certified Public Accountant) in USA etc.
3. Student Eligibility:
Should be an Indian National
Secured admission to Professional/Technical courses through entrance
Test/Selection process.
Secured admission to foreign university/Institutions.
No minimum qualifying marks stipulated in the last qualifying
examination
4. Expenses Considered for Loan:
Fee payable to college/school/hostel: Where the student will be making
his own boarding and lodging arrangements, the sanctioning authority is
authorized to fund boarding and lodging expenses on the basis of estimate
submitted by the student/ parent, provided such expenses are not more
than those charged by the educational institution for boarders.
Examination/Library/Laboratory fee.
Purchase of books/ equipments/ instruments/ uniforms, Purchase of
computers-essential for completion of the course.
Any other expense required to complete the course-like study tours,
project work, thesis, etc. considered for loan is capped at
20% of the total tuition fees payable for completion of the course.
Caution deposit /building fund/refundable deposit supported by
Institution bills/receipts the amount considered for loan should not exceed
10% of the tuition fees for the entire course.
Travel expenses/passage money for studies abroad.
Cost of a two-wheeler up to Rs. 50,000 can be included in the expenses
considered eligible for finance where the loan amount is secured by a
suitable third party guarantee and/or tangible collateral security. Twowheeler can be necessary in some cases where hostel and college are far
apart
Premium of the insurance policy covering the life of the borrower for
loan
5. Maximum Loan Amount:
Studies in India -Maximum Rs. 10.00 lacs
Studies Abroad -Maximum Rs. 30.00 lacs
as and
or the interest payable on the loan, in case the loan is availed by the
applicant. If the applicant does not avail the loan within a period of 4
months of sanction of the loan, the amount will be forfeited.
9. Interest Charges: Loan Amount
Rate of Interest*
For loans up to Rs.4 lacs 3.50% above Base Rate, currently 13.20% p.a.
Above Rs.4 lacs and up to Rs.7.50 lacs 3.75% above Base Rate, currently
13.45% p.a.
Above Rs.7.50 lacs 1.75% above Base Rate, currently 11.45% p.a.
a.0.50% concession in interest rate for girl students availing
Education Loans with effect from 2nd March 2009
b.1% concession in rate of interest to be provided for full tenure of the
loan if full interest is serviced during the moratorium period (including
course duration). The interest should be serviced promptly soon after
application but not later than the following month to avail the concession
c. As the concession of 1% is available for servicing interest during
moratorium, interest in the loan a/c should be reset when the repayment
starts and excess interest of 1% p.a. pertaining to the study period and
moratorium period should be refunded/ credited to the loan a/c.
d. Simple interest to be charged during moratorium period.
e. Penal interest @ 2% to be charged for loans above Rs. 4 lacs for the
overdue amount and overdue period.
10. Sanction & Disbursement:
The loan is generally sanctioned at the branch nearest to the permanent
residential address/place of domicile of the student/parents.
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.
For studies in India, in genuine cases, the tuition fee already paid to the
institute by the borrower from their own sources for first semester at the
time of counselling/ admission may be considered for reimbursement
provided the reimbursement is claimed within 6 months of the payment.
11. Repayment:
Repayment Holiday/ Moratorium: Course period + 1 year, or 6 months
after getting job, whichever is earlier.
Maximum Loan Limit
Repayment Period Up to Rs. 4 Lacs5-7 years
Above Rs. 4 Lacs and up to Rs. 7.5 Lacs 5-7 years
SCHEME OF EDUCATION
LOAN FROM PUNJAB
NATIONAL BANK
Studies in India
1.
2.
3.
4.
5.
6.
7.
8.
Studies abroad
i) Graduation: For job oriented professional/technical courses offered by
reputed universities.
ii) Post graduation: MCA, MBA, MS, etc.
iii) Courses conducted by CIMA- London, CPA in USA etc.
iv) Degree/Diploma courses* like aeronautical, pilot training, shipping
etc. provided these are recognized by competent regulatory bodies in
India/abroad for the purpose of employment in India/abroad.
*Diploma Course and certificate courses shall not be covered under the
eligible courses for study abroad except as mentioned above.
Eligibility:
Student eligibility
a)
b)
2.
3.
4.
5.
6.
7.
8.
Quantum of Finance
Need based finance, subject to employability and earning potential of the
student with prescribed margin as per the following ceilings :-
Margin
Up to Rs.4.00 lacs
Nil.
Above Rs.4.00
lacs
Studies in
India
Studies
5%
15%
Abroad
Security
Up to Rs.4.00 lacs:
Above Rs 4.00 lacs and Up to Rs
7.5 lacs:
Above Rs 7.5 lacs:
Repayment
Repayment of loan will be in equated monthly instalments (EMIs) for
period as under:
For loans up to Rs.7.50 lakh- up to 10 years
For loans above Rs.7.50 lac
- upto 15 years
Repayment holiday/Moratorium:
Documentation Charges
Up to Rs. 4 lacs
The scheme provides full interest subsidy during the period of moratorium on
education loans taken by EWS students for pursuing any of the approved courses
of studies in technical / professional streams from recognized institutions in India.
Applicability
Linked with the existing education loan scheme of IBA and is restricted to
students enrolling in recognized professional courses ( after class XII) in India, in
educational institutions established by Act of Parliament, other institutions
recognized by the concerned statutory body, IIMs and other institutions set up by
the Central Government .
Moratorium Period
Course Period plus one year or six months after getting job, whichever is earlier.
The interest subsidy shall be available to the eligible students only once, either for
the first undergraduate degree course or the post graduate degrees / diplomas in
India inclusive of integrated courses (graduate + post graduate).
Interest subsidy under this scheme shall not be available for those students who
either discontinue the course midstream or who are expelled from the Institutions
on disciplinary or academic grounds.
However, the interest subsidy will be available for the actual period of study, only
if the discontinuation was due to medical grounds for which necessary
documentation to the satisfaction of the Head of educational institution will have
to be given.
Interest Rates- Loans & Advances
Existing borrowers have the option to continue with the existing BPLR
System till expiry of their existing contract with the bank or shift to the Base
Rate System for which they may contact the concerned branch.
DATA
ANALYSIS&INTERPROTATION
3.1COMPARITIVE STUDY OF EDUCATION LOAN
SANCTIONED PANJAB NATIONAL BANK & STATE
BANK OF INDIA IN 2010-11
BANK
SATE BANK OF INDIA
PUNJAB NATIONAL BANK
12.50%
10.50%
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 10.50% & SBI is 12.50% p.a...The
intrest rate of loan amount up to 4 lacs there is no security
required. The actual interst rates at which an individual will be
13.25%
11.25%
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 11.25% & SBI is 13.25% p.a...The
intrest rate of loan amount above Rs.4lacs & up to Rs.7.5 lacs
there is no security required. The actual interst rates at which an
individual will be able to get an education loan depend on
individual financial profile & negotiating ability.
13.25%
11.25%
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 11.25% & SBI is 13.25% p.a...The
intrest rate of loan amount above Rs.7.5lacs there is security
required. The actual interst rates at which an individual will be
able to get an education loan depend on individual financial
profile & negotiating ability.
12.00%
10.25%
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 10.25% & SBI is 12.00% p.a...The
intrest rate of loan amount up to 4 lacs there is no security
required. The actual interst rates at which an individual will be
able to get a education loan depend on individual financial
profile & negotiating ability.
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 11.25% & SBI is 13.55% p.a...The
intrest rate of loan amount above Rs.4lacs & up to Rs.7.5 lacs
there is no security required. The actual interst rates at which an
individual will be able to get an education loan depend on
individual financial profile & negotiating ability.
13.05%
10.25%
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 10.25% & SBI is 13.05% p.a...The
intrest rate of loan amount above Rs.7.5lacs there is security
required. The actual interst rates at which an individual will be
able to get an education loan depend on individual financial
profile & negotiating ability.
BANK
SATE BANK OF INDIA
PUNJAB NATIONAL BANK
13.30%
10.50%
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 10.50% & SBI is 13.30% p.a...The
intrest rate of loan amount up to 4 lacs there is no security
required. The actual interst rates at which an individual will be
able to get a education loan depend on individual financial
profile & negotiating ability.
BANK
SBI
PNB
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 11.25% & SBI is 13.55% p.a...The
intrest rate of loan amount above Rs.4lacs & up to Rs.7.5 lacs
there is no security required. The actual interst rates at which an
individual will be able to get an education loan depend on
individual financial profile & negotiating ability.
11.55%
10.00%
In the above table we can see the intrest rate of education loan
PUNJAB NATIONAL BANK & STATE BANK OF INDIA.
Punjab national bank is 10.00% & SBI is 11.55% p.a...The
intrest rate of loan amount above Rs.7.5lacs there is security
required. The actual interst rates at which an individual will be
able to get an education loan depend on individual financial
profile & negotiating ability.
Conclusion
BIBILIOGRAPHY
Books referred:
Dr.P.C.Tulasian, Financial Management, 1st edition, S.Chand
Publication, Pg.no.13.13 - 13.15
E.Dharmaraj, Financial Services, 1st edition, S.Chand Publication,
Pg.no.65 - 72.
K.D. Basava Elements of Indian economics page no 10.5 12th edition
of loan compendium- retail banking schemes.
Websites:www.pnb .com
www.statebankofIndia.com
www.pnb.com
www.apnaloan.com
www.timesofmoney.com
www.pnbhfl.com 71