INTRODUCTION

This project is a study of Scenario of EDUCATION LOANS WITH RESPECT TO PRIVATE AND PUBLIC SECTOR BANKS and what procedures are followed to get an education loans. Other than general overview of the current operations parameters, the project aims to look into the details of how a bank operates to increase their profit or earnings, thereby increasing their customer base. Based on the findings of a Six-week study, this report identifies certain loopholes in the attainment of education loans. Finally, the report provides possible solution to the above problems in the form of recommendation as well as certain suggestion attainment of education loan The world of banking has assumed a new dimension at dawn of the 21st century with the advent of tech banking, thereby lending the industry a stamp of universality. In general, banking may be classified as retail and corporate banking. Retail banking, which is designed to meet the requirement of individual customers and encourage their savings, includes payment of utility bills, consumer loans, credit cards, checking account and the like. Corporate banking, on the other hand, caters to the need of corporate customers like bills discounting, opening letters of credit, managing cash, etc.

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Metamorphic changes took place in the Indian financial system during the eighties and nineties consequent upon deregulation and liberalization of economic policies of the government. India began shaping up its economy and earmarked ambitious plan for economic growth. Consequently, a sea change in money and capital markets took place. Application of marketing concept in the banking sector was introduced to enhance the customer satisfaction the policy of privatization of banking services aims at encouraging the competition in banking sector and introduction of financial services. Consequently, services such as Demat, Internet banking, Portfolio Management, Venture capital, etc, came into existence to cater to the needs of public. An important agenda for every banker today is greater operational efficiency and customer satisfaction. The mew watchword for the bank is pretty ambitious: customer delight.

The introduction to the marketing concept to banking sectors can be traced back to American Banking Association Conference of 1958. Banks marketing can be defined as the part of management activity, which seems to direct the flow of banking services profitability to the customers. The marketing concept basically requires that there should be thorough understanding of customer need and to learn about market it operates in. Further the market is segmented so as to understand the requirement of the customer at a profit to the banks.

T.John College, Bangalore

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RESEARCH PROBLEM
There is lot of problems that occurred during my research work. Firstly there was lot of biasness on the part of respondents while answering my survey. Lastly fluctuating interest rate is one of the biggest problem in my research work i.e. respondents choose those banks which charge less rate of interest for education loan, ignoring other facilities.

Need of the study:

y The loans from various banks are only being provided to full time students. It is very
good the banks are giving financial support to students but banks provide these loans only to those students who give big securities to banks, but those students who belong to poor families, find it difficult to manage security.

y So these securities are not beneficial for poor students. For avail education loans, one has
to be below age 30 to be eligible to get education loan from bank one has to show some property or the parents salary.

y The banks dont just trust the identity of students and also the college offer letter.
Students should not depend on loan too much because its hard to come unless one is a very good student with good academic track record.

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RESEARCH OBJECTIVE & RELATED SUB OBJECTIVES:

The primary objective of research is to know the mindset of the people regarding education loan and also to find out students perception regarding the loan.

After fulfilling the primary objective, now its turn for the secondary objective which include analysis of details regarding the education loans pursed by the people. The areas, which are to be kept in light, are:

 Amount of loan taken by students.  Institution from which loan has been taken. Ratio of Amount sanctioned by the banks with students demanded y y To know the people requirement for taking education loan. Finding awareness of people regarding education loan.

INFORMATION REQUIREMENT- IN DETAIL& SOURCE OF INFORMATION:

Collection of information is a basis to make decision. Information collected unsystematically & unscientifically is irrelevant in making decision. Banks & Corporations are continuously collecting information from their people, who have already taken education loan & those who want to take loan. They will provide company systematic and relevant information. Before giving loans, banks and corporations has to see that whether the person will be able to pay EMI or not. For this they seek certain informations like:

y y y y y

How many children do they have? Monthly income (which should more than Rs. 9000) Credit clearance (whether he /she has taken loan and paid it or not.) About their occupation. Mortgage property should be marketable. Page 4

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SOURCE OF INFORMATION:

Information comes either from sources internal to the firm or from external sources. External sources, if information can further break down into primary and secondary sources. In my project I have used primary sources or primary data. Primary data are those which are collected specifically by or for the data users .There is no intervening party to summarize the original data. These data are directly collected from the people.

CHOICE OF RESEARCH DESIGN ALTERNATIVES AND CHOICE:

In my research project I have used exploratory research. Exploratory research is a natural step. As the number of opportunities or possible problems may be very large, it is impractical to find and study each of them. Exploratory research is useful to find the most likely alternatives, which are then turned into hypothesis. Formal design is conspicuous By its absence in exploratory studies. The imagination of the researcher is the key factor. However, three lines of at tact may aid in finding hypothesis of value:

Study of secondary sources of information.

Survey of individuals who can opt to have ideas on the General subject

Analysis of selected cause.

I have used exploratory research for my project. This topic Home loans is a wide topic and needs lot of explanation.

T.John College, Bangalore

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TOOLS AND TECHNIQUE USED AND SAMPLE SIZE

Sampling may be defined as the selection of some of an aggregate or the totality on the basis of which a judgment or inference about the aggregate or totality is made. It is the process of obtaining the information about an entire population by examining only part of it. The sampling technique for the problem is: Non Probability Sampling. Under this I have used judgmental and then convenience sampling was done. In judgmental sampling first I sought advice of my instructor. I was told to choose the best sample for my study. After this I selected the items from the universe as per convenience sampling. The universe under study consisted of customers having the following characteristics: -

 Age between 12 years and 60 years ( both male and female)  Education more than and including high school.  People who have already taken education loan.  Residents of BANGALORE. Sample Size: -The size of sample chosen for the questionnaire was 100.

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FIELD WORKMETHOD USED FOR DATA COLLECTION

I have collected information from different banks and also collected information from 130 respondents out of which 100 are acceptable.

Methods used for Data Collection:

Primary sources
Questionnaire method was used for data collection. Quite often questionnaire is considered as the heart of research. Hence it should be carefully constructed. The basic objective of preparation of this questionnaire is to know the awareness level of the peoples regarding education loan services offered by different banks in BANGALORE. I framed structural and non disguised questionnaire.

y y y y y

Questionnaire includes: Dichotomous question Multiple choice questions Rank order question Open ended question

I have collected the information directly from the people. People who have taken education loans from different banks and corporations at different rate of interest.

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Secondary sources of data

Web site, books, magazines, journals, has been used to collect the data.

LIMITATIONS:
Total annual income of the people as usually they will avoid telling the truth such details, also the opinion aired by them may be biased due to unavoidable factors. This may affect the interpretation of the data collected up to the extent of the information given by the client is false and biased.

Time limitation while doing project

Many banks provides loan but in this research only four banks are taken for consideration

The respondents are not sincere while giving the feedback related to this project. So it is difficult to put the interpretation.

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INDUSTRY AND COMPANY PROFILE

Education Loan background

The student loan scheme was introduced in1992 with the aim of enabling access to tertiary education for everyone who wants it. There are three government agencies involved in the scheme: -

The Ministry of education for strategic policies in relation to the Student loan scheme. On their website you will find links to the other agencies, current topics, debt projections, comparison of repayment periods by gender and ethnicity, the repayment estimator and the data integration project.

Study link (a division of the Ministry of Social Development) is responsible for the administration and delivery of student loans to students during the year of study. After the end of each academic year Study link transfers those loans to Inland Revenue for collection.

Inland Revenue is responsible for collecting student loan repayments from the year after the money is borrowed and administering interest write-offs.

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Rights and responsibilities

y y y Our rights as a borrower Our Responsibilities Inland Revenues responsibilities

Rights as a borrower

Advices on how to best manage your student loan for your particular situation.

No one can be given information about your student loan without your consent. If you want to give anyone permission to get information about your loan, call us on 0800 377 778 or Study Link on 0800 889 900.

You have the right under the Credit Contracts Act 1981, to know in advance the total amount of money, including interest that has to be paid back.

It is your right to see most of the personal information we hold about you, and to ask us to correct any errors.

Free statements of your account at any time.

Access to tools to help you manage your loan, such as the ability to look at your account information online, and the repayment calculator

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Students responsibilities

y y y y y y

Ensuring we have your correct name and contact details. All information you provide must be true, with nothing left out. Advising your employer that you have a student loan. Ensuring you is on the correct tax code. Advising us if your personal tax situation changes in any way, such as if you go overseas. You must meet all your loan responsibilities until the loan is repaid in full.

Inland Revenues responsibilities

y Collection of your repayments. y Advising you in advance how much your loan is, including the interest rate y .As a resource of information about your entitlements and responsibilities. y Providing information on how to best manage your student loan

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COMPANY BACKGROUND

PUNJAB NATIONAL BANK: -

PNB was incorporated in the year 1895. Since its humble beginning over hundred years ago, the
bank has grown in stature to become one of the leading banking institutions in India. The bank has grown in size to over 5000 branches at the end of FY 2005. Historically government has instructed PNB to rescue troubled banks with as many as seven such banks being merged with the bank.

Current account and saving account consists a percentage of total deposits at 49.9 per cent and is one of the best among nationalized banks. The banks continued focus towards acquiring low cost deposits and the large reach of the bank in rural and semi-urban regions has resulted in improving the percentage share of such deposits.

About 68 per cent of the branches are in the rural and semi-urban regions thus giving the bank access to low cost deposits. Although, large share of low cost deposits facilitated the bank to record high margins during the past few years. The bank is now focusing towards increasing its share in retail advances to maintain these spreads. The yield on the retail advances is relatively higher and PNB has been lagging behind other of retail credit.

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STATE BANK OF INDIA: -

SBI

is the largest bank, accounting for about 25 % of Indias deposit and loan activities.

Tracing its roots back almost 200 years to the British East India Company, the bank operates more than 13000 branches within India and more than 50 offices in some 30 other countries. While its size has slowed modernization of both its services and its products, the bank has become more computerized. Its international banking services include shipping and export financing and merchant banking. The Reserve Bank of India owns 60 % of State Bank of India. SBI has nearly 9000 offices in India and 33 countries across the world employing nearly 240000 people. By far the biggest financial services group in the country, having one of the largest networks of offices in the world, the group accounts for about 31% of the banking assets in India. The State Bank of India was fined $ 7.5 million by the Federal Reserve and other US regulators for violations of Bank Secrecy Act and maintains complete books and records. SBI is Indias largest commercial bank, consented to the fine, without admitting to any of the allegations, the Fed said in a joint statement with the Federal Deposit Insurance Corporation and the New York State Banking Department. SBI offers the convenience of 5500 ATMs in India, the largest bank in the country and continuing to expand fast. This means that a person can transact free of cost at the ATMs of State Bank Group.

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Housing Development Finance Corporation: -

HDFC is a private sector bank in India engaged in retail banking, wholesale banking and
treasury operations. HDFC is recorded as one of the banks among private sectors of India for FY 2005. The retail banking division provides loans against securities, auto loans, personal loans, bill payment services, acquiring transaction and depository services. Through its wholesale banking operations, the Bank provides loans, deposit products, documentary credits, guaranties, bullion trading and foreign exchange and derivative products. It also provides cash management services, clearing and settlement services for stock exchanges, tax and other collections for the government, custody services for mutual funds and correspondent banking services. The treasury group manages its balance sheet and provides foreign exchange and derivate products for its clients. Results reflect higher interest earned on loans and investments and reduced cost of funds, partially offset by higher non-interest cost.

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Industrial Development Bank of India: -

Institution of the country with a four decadal multi faceted contribution towards catalyzing industrialization in the country, metamorphosed into a banking company. IDBI, the erstwhile Principal development financial bank of India limited. The new entity, a company within the meaning of companies act 1956 and a banking company as defined under Banking Regulation Act, 1949, has been formed in accordance with the provisions of IDBI (Transfer of Undertaking and Repeal) Act 2003 (Repeal Act) passed by Parliament. With the Central Government notifying October 1 as the Appointment Day and RBI issuing the requisite notification on September 30 incorporating IDBI ltd as a scheduled bank under the RBI Act, 1934, IDBI formally enters the portals of banking business over and above the business currently being transacted. It may be recalled that the Parliament passed Act, 2003 on December 16, 2003 and the President of India accorded his assent thereto on December 30, 2003. The Repeal Act came into force on July 02, 2004 through a notification of the Government of India, which enabled IDBI to obtain requisite statutory and regulatory approvals, including those from RBI for conversion into a banking company. Although IDBI ltd commences its foray into banking on a standalone basis a, merger of IDBI bank with IDBI ltd, a mutually gainful proposition with positive implications for all stakeholders and clients in terms of operational synergies. Logistics advantages, cost efficiencies and rationalization of business processes are expected to be in place before the end of the current financial year ended March 31, 2005. The Board of Directors of both IDBI and IDBI bank has accorded in principle approval of the same on July 29, 2004

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WHY THIS PROJECT WAS UNDERTAKEN

As a management student it is necessary to know about various services that are provided by the banks, and also to know what are the various procedures that are to be fulfilled in getting the services done from various private as well as nationalized banks.

Financial aid is an important factor for students who are planning to study abroad. Careful planning is both necessary and wise. Foreign nationals are required to show proof of sufficient funds to cover at least the first year of their college education to apply for a student visa.

The financial institutions have undergone a sea change after globalization. The banks, nationalized or private have brought down their interests rate for loans, made higher interest to be paid for deposits, avail every kind of service to expedite investments on infrastructure growth of the nation. Now the services of every bank whether private or nationalized has undergone a sea change. it is because of the entrance of the private banks at a larger scale.

The study for difference of nationalized v/s private banks is done to have a watch on the workings of both the banks and to determine that which bank (private and nationalized) is working more effectively.

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Problem Environment

Presence of many players- education loans has emerged as the preferred line of business over the last few years and so many players are there in this business due to which there is a tough competition.

It is not so easy to get education loan for higher education from the banks. There are numerous pit falls and hidden costs that the glitzy, catchy colored broachers do not mention.

Problem faced by banks

During the survey made ion banks the PNB official said they allow loan up to Rs.7.5 lakh for higher education in India, for studies abroad the loan limit can be stretched up to Rs. 15 lakhs. But the fact is that only few students apply for loan for studies in India. Mostly they apply for loan for studies abroad.

The loan requires guarantors. However there is quite a large section of loan seekers particularly in U.P, M.P and Bihar, who are not able to take the advantage of loans because of their inability to produce co-guarantors. According to survey, the PNB has disbursed loans to 356 students amounting to at total of Rs. 6.40 lacks.

Trends show that students have been availing these loans for engineering and medical courses within the country and for management and IT related courses abroad.

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Problem faced by students

For approaching education loans, one has to be below age 30 to be eligible. The loans from various banks are only being provided to full time students. It is very good the banks are giving financial support to students but banks provide these loans only to those students who give big securities to banks, but those students who belong with poor families, find it difficult to manage security. So these securities are not beneficial for poor students.

To get education loan from bank one has to show some property or the parents salary. The banks dont just trust the identity of students and also the college offer letter. Students should not depend on loan too much because its hard to come unless one is a very good students with good academic track record.

COMPETITIVE SITUATION
Education loan is one of the booming sector adding a lot to our country economy and helping the students in brightening up their future. Many banks both nationalized & privatized bank has entered in this sector, with attractive and new schemes. Some of the competitors are as follows.

y y y y y

State bank of India. Punjab national bank IDBI HDFC Vijay Bank

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STATE BANK OF INDIA

A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.

Eligible Courses
All courses having employment prospects are eligible.

y y

Graduation courses/ Post graduation courses/ Professional courses Other courses approved by UGC/Government/AICTE etc.

Expenses considered for loan

y y y y y y y

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 up to Rs. 50,000/-

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

Amount of Loan y y For studies in India, maximum Rs. 10 lacks Studies abroad, maximum Rs. 20 lacks

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Interest Rate

y y

For loans up to Rs. 4 lacks 11.25% p.a. For loans above Rs. 4 lacks and up to 7.50 lacks 12.75% p.a.

Processing Fees

y y

No processing fee/ upfront charges Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in the margin money

Repayment Tenure

Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.

Place of Study In India

Loan Amount Up to Rs.10 lacks

Repayment Period in Years 5-7

Abroad

Up to Rs. 20 lacks

5-7

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Security Margin

Amount Up to Rs. 4 lacks

Studies In India No Security

Studies Abroad No Security Third Party

Above Rs. 4 lacks Third Party to Rs.10 lacks Above Rs. 10 lacks to Rs. Guarantee

Guarantee Tangible Collateral security of

10 Tangible Collateral security for suitable value of loan or third party guarantee

lacks(India)/ Rs. 20 full value of loan lacks(Abroad) Rs 15 lacks to Rs. 20 lacks

Tangible Collateral security for full value of loan

Margin

 For loans up to Rs.4.0 lacks : No Margin  For loans above Rs.4.0 lacks:   Studies in India: 5% Studies Abroad: 15%

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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)

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HDFC:

HDFC Education Loans

Purpose: HDFC gives loans to students to partly meet their educational expenses / costs for
pursuing specific higher educational courses at institutes approved by HDFC. Loans are given to students who are citizens of India. The student should have a consistently good academic record, and admission to an approved Educational Institute for pursuing a recognized course.

Eligibility: Students enrolled with an approved Educational Institute and desirous of availing
the education loan can make an application, with the earning parent / guardian being the coapplicant to the loan. Currently, new entrants and existing students of only select leading national educational institutions are eligible to apply for education loans. Please check with your nearest HDFC Office for the list of approved institutions.

Amount of loan: Loans can be availed upto a maximum of 90% of the total cost as determined
by HDFC. The costs would generally cover expenses incurred towards the course fee, library charges, hostel and mess charges, cost of books and equipment. HDFC lends upto a maximum of Rs. 20,00,000 on an Education Loan.

The period of the loan is determined on the merits of each case but would not exceed 5 years.
The repayment can be accelerated on completion of the course, considering the earning capacity of the student. HDFC's main concern is to help individuals comfortably repay the borrowed amount.

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Rate of interest
Loan amount (RS) Up to 20,00,000 rate of interest -%p.a 14.0

PUNJAB NATIONAL BANK

EDUCATION LOAN - "VIDYALAKSHYAPURTI"

EMI Calculator
PNB's attractive Education Loan Scheme - "Vidyalakshyapurti" is designed to provide financial support to deserving students to undertake basic education and to the meritorious students to pursue higher professional and technical education in India and Abroad.

The Scheme enables all type of needy students viz., students of +2 Stage, Graduation courses B.A., B.Com, B.Sc. etc., Post-Graduation courses, Masters in PhD; 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, C.A., CFA etc., courses conducted by IIM, IIT, NIFT etc., Evening courses of reputed Institutes, Diploma / Degree courses conducted by Colleges, Universities approved by UGC / Government / AICTE etc., Courses offered by National Institutes and other reputed Private Institutes, in order to meet the Cost of their studies in India and abroad.

Students should approach the branch nearest to the place of domicile.

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Eligibility 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

Expenses considered for Loan

 Fee payable to College / School / Hostel  Examination / Library / Laboratory fee.  Purchase of books / equipments / instruments / uniforms. Secured admission to foreign University / Institutions.  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.  Boarding and lodging expenses in recognized Boarding Houses / private accommodations  Any other expense required to complete the course - like study tours, project work, thesis, etc.

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Quantum of Finance
Need based finance, subject to repaying capacity of the parents / students with margin and the following ceilings: -

 

For studies in India: Maximum Rs.7.50 lacks. For studies abroad: Maximum Rs.15.00 lacks.

Margin

Up to Rs.4.00 lacks:

Studies in India

Nil. 5%

Above Rs.4.00 lacks: Studies Abroad 15%

Security
Up to Rs.4.00 lacks: No Security. Collateral Security of Suitable value (equivalent to 100% of the amount Above Rs.4.00 lacks: of loan) / co-obligation of parents / guardian / third party.

Assignment of future income of the student for repayment of loan shall be taken in addition to the above.

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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.

The document should be executed by both the student and the parent / Guardian.

BPLR + term premia of 1.25% Up to Rs. 4 lacks (Presently 11.25%)

BPLR + term premia of 1% + 1% Above Rs.4 lacks (Presently 12.25%)

 The interest shall be debited monthly on simple basis during the Repayment holiday / Moratorium period.

 Penal Interest @2% is charged for above Rs.2.00 lacs for the overdue amount and overdue period.  1% concession can be permitted in interest to loanees if the interest is serviced by them during the study period and the repayment holiday specified for interest / repayment under the Scheme.

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Repayment
Repayment Holiday / Moratorium Course period + 1 year OR 6 months after getting job Whichever is earlier.

Principal and interest 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.

Nil

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

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fees, Boarding and lodging expenses in recognized Boarding Houses etc. already incurred by way of loan taken from identified sources (to meet the contingency) by the applicant, if claimed within 3(three) months of such payments before consideration of the loan by the Bank.

Sanction of the loan at a place other than the place of domicile of the student with the approval of the Zonal Manager of respective zone.

Second time loan can be sanctioned to the same student-borrower for completion of next higher course by the Zonal Manager of the Zone within the ceiling of loan i.e. Rs.7.50 lacks for studies in India and Rs. 15.00 lacks for studies abroad.

For loan above Rs 4.00 lacks and up to Rs. 7.50 lacks to pursue all professional/technical courses, 3rd party guarantee provided on behalf of the student be obtained. However, where the parents are party to the loan as co-obligates and the bank is satisfied about the net worth of the parents, the condition of 3rd party guarantee may be waived.

To facilitate expeditors disposal of applications, a checklist regarding documents, security etc., along with application forms for Education loans be provided to intending borrowers.

An illustrative checklist is as under:

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 Loan application on Bank's format.  Passport size photograph  Proof of Address.  Proof of Age. Proofs 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 lacks:

y y

Particulars of Guarantors and details of their Assets & Liabilities. If immovable property offered as Collateral Security - copy of Title Deed, Valuation Certificate and Non-encumbrance 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.

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IDBI:
Courses approved Indian Universities For Professional Courses i.e. B.E., B.Tech, M.B.B.S. Post Graduate Courses i.e. M.E., M.Tech., M.S., M.D., M.B.A., M.C.A., etc. recognized by AICTE or part time / on-line distance learning courses (subject to terms & conditions)

Foreign Universities For Graduate/Post Graduate/Research/Doctorate studies that insist on TOEFL, GRE, GMAT scores.

Eligibility Indian Universities For Graduate courses: at least 75% in the +2 stage.

For Post Graduate Courses: first class graduates.

Foreign Universities Proof of TOEFL, GMAT, GRE scorecard, and 1-20 admit card.

Age of the applicant should not be more than 30 years for Indian Universities and 35 for Foreign Universities. Age of the parent / Guarantors should be below 55 Years. The annual income of the family should not be less than Rs. 3 lacks.

Amount of loan For Indian Universities, actual tuition and other fees, but not exceeding Rs. 5 Lacks for the entire duration of the course.

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For Foreign Universities, considering that in addition to fees, there are travel / preparatory expenses, the loan amount shall not exceed Rs. 15 Lacks in all.

Interest rates Long term Prime Lending Rate + 1% p.a. + taxes

Processing Fees: Rs. 1000 at application, and Rs. 500 p.a. thereafter Cost of documentation / legal expenses at actual

Period of loans Graduate Studies: Maximum moratorium period of 5 years including the actual duration of the course. After which the loan should be repaid within the next 3 years. Post Graduate Studies: Moratorium period of 2 years i.e. the course duration. Loan repayment within the next 3 years. No prepayment penalties levied In fact, there are incentives for prompt repayment. Like refund of the entire processing fee, if not a single installment is missed/delayed.

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SAMPLE PROFILE
The sample from whom the information has been taken is 130, which includes children and also aged people. The children include the ones who have taken education loan or looking for it, and aged people are usually the parents who have pursued for education loans, or looking for it. The questionnaire used is below

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PR M RY DATA TAB 1#. Do you know about education loan?

ATION AND INTERPRETATION

Yes No TOTAL

70 30 100

RESPONDENT KNOW ABOUT EDUCATION LOAN

70 70
60 50 40 30 30

20 10 0
Yes No

Interpretation: 70% respondents have the knowledge about education loan.Only 30% dont have knowledge about education loan.

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2) Which type of courses, you are applying for education loan?

Post Graduate Professional Technical Non- Technical TOTAL

30 52 10 8 100

Courses Applied for Education Loan

on- Technical Technical 8%

10%

Interpretation: 52% of the respondents are taking loan for professional courses. 30% are taking loan for post graduation. Rest others are taking for technical and non-technical courses.

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Post Graduate 30%

Professional 52%

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3#. Do you have any bank account?

Yes No Total

100 0 100

100 Res

100

100
90

80 0

60

50 40
30 20

10
0

Interpretation: 100% of the respondents have bank account.

T.John College, Bangalore

Yes

ents have Bank Account

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4#. In Which bank do you have account? SBI PNB IDBI HDFC OTHERS TOTAL 28 20 12 18 22 100

RESPON EN S FOR BAN ACCOUN

OTHERS 22%

SBI 28%

HDFC 18% IDBI 12% PNB 20%

INTERPRETATION: 28% Respondents have their account in State Bank Of India, 20% are having in PNB, and rest other having in other banks.

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5#. Does your bank give the facility of education loan?

Yes No Total

66 34 100

EDUCA ON LOAN FAC L Y BY BAN

No 34%

Yes 66%

INTERPRETATION: 66% RESPONDENT SAYS THAT THEIR BANK GIVE EDUCATION LOAN FACILITY. 34% respondents said their bank doesnt give them a education loan facility.

T.John College, Bangalore

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6#. Why do you require education loan?

Higher studies in abroad Higher studies in India Others

62 32 6 100

TOTAL

REQUIREMEN OF EDUC ION LOAN

Ot ers 6%

INTERPRETATION: 62% respondents require loan for higher studies in abroad. 32% respondents said that they require education loan for higher studies in india.

T.John College, Bangalore

Hig er studies in India 32%

Hig er studies in abroad 62%

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7#. From where do you know about education loan?

Friends Newspapers Banks Internet

15 40 25 20 100

TOTAL

Knowle ge about e ucation loan.

Internet 20%

Friends 15%

Banks 25%

Newspapers 40%

Interpretation : 40% respondents got the knowledge about the education loan from newspapers. Others know from internet, banks and friends. T.John College, Bangalore Page 40

8#. According to you is it easy to get education loan?

Yes No Total

18 82 100

Proce ure for e ucation loan

100 80 60 40 20 0 Yes No 18

82

INTERPRETATION: 82 respondents say that it is not easy to get education loan. 82% respondents are having negative response towards education loan.

T.John College, Bangalore

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9.#. How much loan you have taken?

Less than 2.5 lac 2.5 lac to 5 lac More than 5 lac Total

15 25 60 100

Amount of loan taken by res ondents

Less t an 2.5 lac 15%

More t an 5 lac 60%

INTERPRETATION: 60% of the respondents has taken loan amount more than Rs.5 lack. Rest others taken below 5 lakhs for studies.

T.John College, Bangalore

2.5 lac to 5 lac 25%

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10#. What is the interest rate?

10% - 12% 12% - 14% 14% and above Total 36 42 22 100

IN EREST RATE
45 40 35 30 25 20 15 10 5 0 10% - 12% 12% - 14% 14% and above

INTERPRETATION: 42% of the respondents are giving interest rate between 12% to 14% on education loan. Others are taken loan with a interest rates of 10-12%

T.John College, Bangalore

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11#. Does bank send you reminder about recovery of loans?

Yes No
Total

70 30
100

BANK REMINDER ON EDUCATION LOAN

70

INTERPRETATION: 70 respondents say that their bank send reminder on Recovery of loans.

T.John College, Bangalore

60 50 40 30 20 10 0 Yes No 30

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12#. Out of the amount applied how much loan do you get?

100 % of amount applied 80 % of amount applied Less than 80 % of amount applied Total

10
35 55 100

AMOUNT OF LOAN RESPONDENTS GET

100 % of amount applied 10%

Less t an 80 % of amount applied 55%

80 % of amount applied 35%

INTERPRETATION: Maximum people get less than 80% as education loan from the banks keeping 20% as margin of safety.

T.John College, Bangalore

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13# Age

Less than 20 years 20-25 years 25-30 years More than 30 years

18
50 20 12 100

TOTAL

RESPONDENTS AGE FOR TAKING EDUCATION LOAN

50 45 40 35 30 25 20 15 10 5 0

INTERPRETATION: Most people between 20-25 years take education loans and People above than 30 years take loans for their kids.

T.John College, Bangalore

Less t an 20 years

20-25 years

25-30 years

More t an 30 years

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14# Income?

Less than Rs.150 000 150000-250000 250000 & above Total

32
44 24 100

RESPONDENTS INCOME

250000 & above 24% Less t an Rs.150 000 32%

150000-250000 44%

INTERPRETATION; Most of the respondents are usually between income Rs150000-250000. 32% of the respondents are having income less than 150000.

T.John College, Bangalore

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15# GENDER
Male
Female Total

66
34 100

GENDER
66 70 60 50 40 30 20 10 0 Male Female 34

INTERPRETATION: Most of the respondents are male. Only 34% are female.

T.John College, Bangalore

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CROSS-BIVARIATE ANALYSIS STUDY RESULTS AND ITS INTERPRETATION

A) Relationship between interest rate & bank Preferences for education loan hypothesis:

H0 -There is no significant association between the interest rate that respondent gives and the bank preferences for education loans.

H1 There is significant association between the interest rate that respondent gives and the bank preferences for education loans Original Value .

Original Value
BANKS INTEREST RATE 10%-12% 12%-14% PNB SBI HDFC IDBI 12 20 1 3 36 10 16 5 11 42 14% & above 8 4 4 6 22 30 40 10 20 100 TOTAL

T.John College, Bangalore

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Expected Value

BANKS

INTEREST RATE 10%-12% 12%-14% 14% & above 12.6 16.8 4.2 8.4 6.6 8.8 2.2 4.4

PNB SBI HDFC IDBI

10.8 14.4 3.6 7.2

(X ) calculated value Degree of freedom = 6

=(O - E) / E =13.137

Table value at 5% significance level. =12.592

The calculated chi square value (13.137) is greater than table value (12.592) at 5% level of significance. Hence the hypothesis is rejected. There is significant association between interest rate that respondents gives and banks preferences for education loans.

B) Relationship between income of respondents & bank Preferences for education loan hypothesis: H0 -There is no significant association between the income of respondents and the bank preferences for education loans.

H1 -There is significant association between the income of respondents and the bank preferences for education loans.

T.John College, Bangalore

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Original Value

BANKS <150000 Rs PNB SBI HDFC IDBI 11 18 1 2 32

INCOME 150000-250000 10 17 5 12 44 9 5 4 6 24 Rs 250000 >

TOTAL

30 40 10 20 100

T.John College, Bangalore

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Expected Value

BANKS

INTEREST RATE <150000 Rs 150000-250000 Rs 250000 > 13.2 17.6 4.4 8.8 7.2 9.6 2.4 4.8

PNB SBI HDFC IDBI

9.6 12.8 3.2 6.4

(X ) calculated value

=(O - E) / E =12.9172

Degree of freedom = 6

Table value at 5% significance level. =12.592

The calculated chi square value (12.9172) is greater than table value (12.592) at 5% level of significance. Hence the hypothesis is rejected. There is significant association between income of respondents and banks preferences for education loans.

T.John College, Bangalore

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SUMMARY AND FINDINGS

I have got the mixed response from the respondents regarding education loans. In this study we study the awareness level of respondents regarding education loans provided by different banks. There I find:

y y y y y y y

Most of the respondents have the knowledge of education loans. Most of them take loans for going to abroad. Most of the respondents take loan for post-graduate/under-graduate courses. Most of them keep their awareness about education loans from newspapers. Most of them take loan of more than Rs. 250000 The bank are taking more securities form people while give in education loan By seeing analysis interpretation it is know that professional are more in number while talking education loan so the banks should create more awareness among no professional regarding education loan

y y

Most of the respond feel that the interstate rate for education loan is 12 to 14% Banks are not giving education loan as purposed by people they are giving less than 75% as purposed by people

Most of the people who are taking education loan are having income between 150000- 250000

T.John College, Bangalore

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CONCLUSION
In the two public banks that are PNB and SBI it was found that PNB education loan is designed to provide better education opportunities to bright and needy students. It ratio of interest is 12% at 4lac, 13% at over 2lac and 15lac and 15% loan over 15lac, while SBI provide loans for pursuing studies in recognized schools/colleges/industries its rate of interest is 10.5% up to Rs. 4lac loans and loans over Rs. 4 lac has presently 11.5% p.a. In case of the private banks HDFC and IDBI, HDFC gives loans to the students to the partly meet of their educational expenses/cost, pursuing specific higher education course at institution approved by HDFC, its rate of interest up to Rs. 2,00,000 is 14 % and IDBI has structured the education loan facility around the students need and the family repayment capacity. Loans is available for part time courses and on line education too and the ratio interest are loans up to Rs. 4lac long term prime lending ratio and loans above Rs. 4lac, long term prime lending plus 1% p.a. and the preceding fees are 0.5% of the loans amount where as cost of documentation/legal expenses are at actual.

T.John College, Bangalore

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SUGGESTIONS:

The candidate who applies for education loan should be properly aware regarding the various banks processes and procedures that are to be fulfilled, as they face problem when they do not have proper knowledge the same.

The education loan requires guarantors so student should have good co-guarantor that can have good repayment capacity when they apply for loan .

Sometimes bankers dont treat their customers properly. There has to be a major change in how banks treat their customers. The bankers should know that they need customers as much as customers need them.

The banks provide education loans only to those students who give big securities to banks, but those students who belong with poor families they cant give big securities, so banks must make some provisions for those students who belong to poor families.

Bank should be go for advertisement campaign from scratch

Bank should try to cash its brand image

Bank should increase its production line in education loan

Bank should advertised about education loan near to colleges and companies

T.John College, Bangalore

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BIBLIOGRAPHY:

REFERED TEXT BOOKS: PRASANNA CHANDRA- Investment Analysis and Portfolio Management-(3rd Edition), Tata McGraw-Hill Publishing Company Limited-2008 y I M PANDEY Financial Management (9th Edition), Vikas Publishing House Limited.

WEB SITES:
www.google.co.in www.pnbindia.com www.sbi.com

T.John College, Bangalore

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QUESTIONNAIRE
1) Do you know about education loan? a) Yes b) No

2)

For which types of courses, you are applying for education loan?

a) Post graduate / under graduate courses. (PGDBM, M.COM, M.Sc,etc) b) Professional courses.( MBA,MCA,etc.) c) Technical courses. (Btech, Mtech, etc,) d) Non-technical courses.

3)

Do you have any bank account?

a) Yes

b) No

4)

In which bank do you have account?

a) SBI

b) PNB

c) IDBI

d) HDFC

e) Others.

5) Does your bank give the facility of education loan?

a) Yes

b) No

T.John College, Bangalore

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6) Why do you require education loan? a) Higher studies in abroad. b) Higher studies in India. c) Others.

7) From where, you come to know about education loans?

a) Friends b) Newspaper c) Banks d) Internet.

8) According to you, is it easy to get education loan?

a) Yes

b) No.

9) What was the security given for education loan?

a) Up to 4 lac no security. b) Above 4 lac to 7 lac third party guarantee. c) Above 7.5 lac tangible collateral security for full value of loan.

T.John College, Bangalore

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10) How much loan you have taken?

a) Less than 2.5 lacks. b) 2.5lac to 5 lacks. c) More than 5 lack.

11) What is the interest rate?

a) 8% to10% b) 10% to12% c) 12% to 14% d) 14% and above.

12) Does your banks sends you reminder about recovery of loan? a) Yes b) No.

13) How much loan do you get?

a) 100% of the amount applied. b) 80% of the amount applied. c) Less than 80% of the amount applied.

T.John College, Bangalore

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PERSONAL DETAILS

Name: Age: a) Less than 20 years. b) 20 to 25 years. c) 25 to 30 years. d) More than 30 years.

Gender:

a) Male

b) Female.

Annual Income:

Less than Rs. 1,50,000. b) Rs. 1,50,000 to 2,50,000. c) More than Rs.2, 50,000.

Family Size: Specify....

T.John College, Bangalore

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T.John College, Bangalore

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