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DEVI AHILYA VISHWAVIDYALAYA, INDORE
MAJOR RESEARCH PROJECT
On
A Comparative Study of
Professional & Traditional
Programs Students Perception
towards Educational loan
schemes
A Research Dissertation Submitted in
Partial Fulfillment
For the Award of the Degree of
Masters of Business Administration
(2009-2011)
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Submitted to:Submitted by:
Prof. Kanika Mehta Chintaman Sankhala
Faculty som M.B.A. IV SEMSIMS, Indore
CERTIFICATE FROM INTERNAL & EXTERNALEXAMINER
This is to certify that Chintaman Sankhala of MBA (Full Time)Semester IV in Sanghvi Institute of Management and Science,
Indore has carried out a Major Research Project titled A
Comparative Study of Professional & Traditional
Programs Students Perception towards Educational
loan schemes. The work done by him is genuine and
authentic.
The work carried out by the student was found satisfactory.
We wish him all the success in career.
Internal Examiner
External Examiner
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Signature
Signature
CERTIFICATE FROM DIRECTOR GENERAL, H.O.D. &FACULTY GUIDE
This is to certify that Chintaman Sankhala of MBA (Full time)
Semester IV in Sanghvi Institute of Management and Science,
Indore carried out a Major Research Project titled A
Comparative Study of Professional & Traditional
Programs Students Perception towards Educational
loan schemes.
The work carried out by the student was found satisfactory
and it is as per the faculty guide.
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Prof. Prashent Gupta Prof. Gaurav Singh
Prof. Kanika Mehta.
(Director General of SIMS) (H.O.D. of SIMS)
(Faculty Guide)
DECLARATION
I, Chintaman Sankhala, a student of Management, Sanghvi
Institute of Management & Science, hereby declare that the
work done by me to do the Major Research Project titled A
Comparative Study of Professional & Traditional
Programs Students Perception towards Educational
loan schemes is genuine and authentic.
Chintaman Sankhala
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M.B.A. IV SEM
SIMS Indore
ACKNOWLEDGEMENT
I sincerely and religiously devote this folio to all the gem of
persons who have openly or silently left an ineradicable mark
on this research so that they may be brought into
consideration and given their share of credit, which they
genuinely and outstandingly deserve.
This expedition of research encountered many trials,
troubles and tortures along way. I am essentially indebted to
my guide Prof. Kanika Mehta for this sweating learning
experience. She overlooked my faults and follies, constantly
inspired and mentored via her proficient direction. It was a
privilege to work under her sincere guidance.
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I express my thanks to Prof. Prashant Gupta, Director
General of Sanghvi Institute of Management & Science,
Indore for his considerate support whenever and wherever
needed. I honestly acknowledge the support provided by the
coordinators, Prof. Gourav Singh & Prof. Vikas Pathak. Iexpress my indebtedness to the management of Sanghvi
Institute of Management & Science, for inspiring us to grab
and utilize this opportunity.
With profound sense of gratitude, I would like to truthfully
thank a recognizable number of individuals whom I have not
mentioned here, but who have invisibly facilitated in
transforming this research into a success saga.
Above all, I would like to conscientiously thank the
Omnipotent and Omnipresent and Omniscient God for his
priceless blessings!
Chintaman
Sankhala(
MBA IV SEM)
Preface
Decision making is a fundamental part of the research
process. Decisions regarding what you want to do, how you
want to do, what tools and techniques must be used for the
successful completion of the project. In fact researchers
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efficiency as a decision maker that makes project fruitful for
those who concern to the area of study.
Basically when we are playing with computer in every part
of life, I used it in my project not for the ease of my work but
for the ease of result explanation to those who will read this
report. The project presents the Study of Professional &
Traditional Programs Students Perception towards
Educational loan schemes.
I had toiled to achieve the goals desired. Being a neophyte
in this highly competitive world of business, I had come
across several difficulties to make the objectives a reality. I
am presenting this hand carved efforts in black and white. If
anywhere something is found not in random to the theme
then you are welcome with your valuable suggestions.
Executive Summary
Many Education loan providers are come up with very
good schemes and the best possible product to the customer
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who has led to the growth of education loan market in India.
The education loan providers try to attract customers by
providing them best possible different categories so that
they can retain customers for long and make them loyal
towards their product.
The loan market is booming in India. It became for
marketers to understand these relationships for successful
execution of education loan strategies.
The data was collected by getting the questionnaire filled
by 50 peoples of Indore. The purpose of this study knows the
Students Perceptiona Comparative Study ofProfessional & Traditional Programs Students
Perception towards Educational loan schemes.
Introduction
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Education loans can augment the boundaries of what you can
achieve
Education loan is becoming popular day by day because of the rising fee
structure of higher education. It came into existence in 1995 started first by
SBI bank and after that many banks started offering study loan.
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. the word
education loans. Loans for education you have never thought about it as a
feasible arrangement.
An extensive range of student and parent loans are presented under the
category of education loans. There are many types of education loans.
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
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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.
Education is central to the Human Resources Development and
empowerment in any country. National and State level policies are framed toensure that this basic need of the population is met through appropriate
public and private sector initiatives. While government endeavour to provide
primary education to all on a universal basis, higher education is
progressively moving into the domain of private sector. With a gradual
reduction in government subsidies higher education is getting more and more
costly and hence the need for institutional funding in this area.
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.
Literature Review
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Loan burdens and educational outcomes James
Monks
Department of Economics, University of Richmond,
Richmond, VA 23173, USA
Received 1 May 1999;
Accepted 24 April 2000
Available online 30 September 2001.
AbstractThere is widespread concern among educators, policy makers, and students
that the current generation of college graduates is being unduly burdened
with debt. This study examines the impact of debt on the educational
outcomes of recent graduating seniors from a set of private, expensive,
highly selective colleges and universities. In particular, I investigate the
relationship between borrowing levels and the likelihood of pursuing agraduate degree, a professional degree, and the career plans of the college
class of 1998. The central conclusion drawn from this analysis is that
students do not appear to be significantly influenced by their debt.
ECONOMIC REFORMS AND FINANCING
HIGHER EDUCATION IN INDIA -P.
Geetha Rani
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National Institute of Educational Planning and
Administration,
17-B, Sri Aurobindo Marg
New Delhi 110 016.
Abstract
It is unambiguous that Policy of the Government of India now
encourages augmentation of resources for covering a larger
portion of cost of higher education. Recent policy changes in
India often favour to divert resources from higher to primarylevel of education and favours for full cost recovery from
students even in public higher education institutions. Cost
recovery measures comprising of increase in fees, student
loans currently operated by commercial banks and
privatisation will exacerbate inequality in the society. Indeed,
there seems to be a nexus between the present student loan
scheme and full cost recovery. Increasing reliance on student
fees, student loans and privatisation without considering thelow-income groups may produce regressive effects in the
society. Under the deep waves of globalisation and
competition, important economic rationale for government
funding especially for higher education is neglected. Public
support for higher education remains essential to ensure a
balanced achievement of educational and social missions,
apart from surviving in the knowledge-based society. It is
essential that funding sources must be diversified but cost-sharing with students has social and political limits, and
excessive commercialization of higher education should be
forbidden.
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The Objectives of the study
The Educational Loan Scheme outlined below aims at providing financial
support from the banking system to deserving students for pursuing higher
education in India and abroad. The main emphasis is that every deserving
student though poor is provided with an opportunity to pursue education with
the financial support from the banking system with affordable terms and
conditions. No deserving student is denied an opportunity to pursue higher
education for want of financial support.
APPLICABILITY
The scheme detailed below could be adopted by all Commercial Banks. The
scheme provides broad guidelines to the banks for operational sing the
educational loan scheme and the implementing bank will have the discretion
to make changes suiting to the convenience of the students/ parents to make
it more customers friendly.
ELIGIBILITY CRITERIA:
Student eligibility:
Should be an Indian National
Secured admission to professional/ technical courses in India or
Abroad
Through Entrance Test/ Merit Based Selection process.
Courses eligible
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Studies in India: (Indicative list)
Graduation courses : B.A., B.Com., B.Sc., B.E., etc. Post Graduation courses : Masters & PhD.
Professional courses : Engineering, Medical, Agriculture,Veterinary, Law, Dental, Management, Computer etc.
Computer certificate courses of reputed institutes
accredited to Dept. of Electronics or institutes affiliated to
university.
Courses like ICWA, CA, CFA etc. Courses conducted by IIM, IIT, IISc, XLRI. NIFT,GRE, etc.
Regular Degree/Diploma courses like Aeronautical, pilot
training, shipping etc., approved by Director General ofCivil Aviation/Shipping, if the course is pursued in India. In
case the course is pursued abroad, the Institute should be
recognized by the competent local aviation/shipping
authority
Courses offered in India by reputed foreign universities.
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 institutions. Banks may have the system of
appraising other institution courses depending on future
prospects/ recognition by user institutions.
Courses, which are not covered under the criteria
mentioned above, individual banks may take a view to
consider extending
education loan under the scheme taking into account the
future prospects/recognition by user institution.
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Studies abroad:-
Graduation : For job oriented professional/ technical
Courses offered by reputed universities.
Post graduation: MCA, MBA, MS, etc.
Courses conducted by CIMA- London, CPA in USA etc.
Expenses considered for loan:
Fee payable to college/ school/ hostel.
Examination/ Library/ Laboratory fee.
Purchase of books/ equipments/ instruments/ uniforms.
Caution deposit, Building fund/refundable deposit supported by
Institution bills/receipts, subject to the condition that the amount does
not exceed 10% of the total tuition fees for the entire course.
Travel expenses/ passage money for studies abroad.
Purchase of computers - essential for completion of the course.
Insurance premium for student borrower
Any other expense required to complete the course - like study tours,project workthis is etc.
QUANTUM OF FINANCE:
Need based finance subject to repaying capacity of the
parents/ students with margin and the following ceilings.
Studies in India - Maximum Rs.10.00 lacs.
Studies abroad - Maximum Rs.20 lacs
MARGIN:
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Up to Rs. 4 lacs NilAbove Rs.4lacs :
Studies in India
5%
Studies 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.
SECURITY:
Up to Rs 4 lacs Co-obligation of parents.
No security
Above Rs.4 lacs and up
to Rs7.5 lakhs
Co-obligation of parents together with
collateral security in the form of suitable
third party guarantee. The bank may, at
its discretion, in exceptional cases, waive
third party guarantee if satisfied with thenet-worth / means of parent/s who would
be executing the document as "joint
borrower".
Above Rs.7.5 lakhs Co-obligation of parents together with
tangible collateral security of suitable
value, along with the assignment of
future income of the student for payment
of installments
Note:-
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The loan documents should be executed by both the student
and the parent/ guardian as joint-borrower.
The security can be in the form of land/ building/ Govt.
securities/ Public Sector Bonds/Units of UTI, NSC, and KVP,
life policy, gold, shares/mutual fund units/debentures, bank
deposit in the name of 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 on second
charge basis provided it covers the required loan amount.
In case the loan is given for purchase of computer, the
computer has to be hypothecated to the Bank.
RATE OF INTEREST:
Up to Rs 4
lacs
BPLR
Above Rs. 4
lacs
BPLR +
1%
Simple interest to be charged during the Repayment
holiday/ Moratorium period.
Penal interest to be charged as applicable to individual
banks.
APPRAISAL / SANCTION/ DISBURSEMENT:
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In the normal course, while appraising the loan the
future income prospects of the student will be looked
into. However, where required, the means of parent /
guardian could also be taken into account to evaluate
re-payment capability.
The loan to be sanctioned as per delegation of powers
preferably by the Branch nearest to the place of
residence of parents.
No application for educational loan received should be
rejected without the concurrence of the next higher
authority.
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.
REPAYMENT:
Repayment
holiday/Moratoriu
m
Course period + 1 year or 6 months
after getting job, whichever is earlier.
The loan to be repaid in 5-7 years after commencement ofrepayment. 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
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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) fixed.
1% interest concession may be provided for loans if the
interest is serviced during the study period when
repayment holiday is specified for interest/ repayment
under the scheme.
INSURANCE
Banks may arrange for life insurance policy on the students
availing Educational Loan. Individual Banks may work out the
modalities with insurance companies
FOLLOW UP/TRACKING:
Banks to contact college/ university authorities to send the
progress report to the bank at regular intervals in respect of
students who have availed loans. In case of studies abroad,
bank may obtain the Unique Identification Number(UIN)/Identity Card and note the same in the bank's records.
PROCESSING CHARGES
No processing/ upfront charges may be collected on
educational loans for studies in India.
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CAPABILITY CERTIFICATE:
Banks can also issue the capability certificate for students
going abroad for higher studies. For this purpose financial
and other supporting documents may be obtained from
applicant if required.
(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.)
OTHER CONDITIONS:
Deserv Students
Banks which wish to support highly and exceptionally deserv/
deserving students without security may delegate such
powers to a fairly higher level authority.
Multiple Loans
In case of receipt of application for more than one loan for
student borrower from a family, the 'family' as a unit has to
be taken into account for considering the loan and security
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taken in relation to the total quantum of finance disbursed,
subject to margin and repaying capacity of the
parent/student.
Minimum Age
There is no specific restriction with regard to the age of the
student to be eligible for education loan.
Change of Address
In cases of student staying with parents and where such
parents have transferable jobs or there is change in address,
the bank may provide in the system of noting the address
for correspondence' for tracking purpose.
Top up loans
Banks may consider top up loans to students pursuing
further studies within the overall eligibility limit, with
appropriate re-schedulement, subject to taking required
security.
Disposal Application
Loan applications have to be disposed of within a period of
15 days to 1 month, but not exceeding the time norms
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stipulated for disposing of loan applications under priority
sector lending.
Flexibility in terms
In order to bring flexibility in terms like eligibility, margin,
security norms, banks may consider relaxation in the norms
on a case-to-case basis delegating the powers to a fairly
higher level authority.
RESEARCH METHODOLOGY
PROJECT TITLE: A Comparative Study of
Professional & Traditional Programs Students
Perception towards Educational loan
schemes.
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:
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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.
FINDINGS
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Sl. Parameter Private Banks
Public Banks
No.
1. Beneficiaries Economically affluent Economically
weaker
Sections of society. Sections
also.
2. Objective Commercial National
and social
3. Aimed at Profit earning not profit alone
4. Margin money Must Flexible
5. Security Necessary Less important
6. Interest rate High Reasonable
7. Attitude Rigid and strict Flexible and
liberal
Sl.
No.
Basis of
Differen
ce
PNB SBI HSBC
1 Max. loan
for studies
in India
Rs. 7.50 Lacs Rs. 10.00 Lacs Min. Rs.
50,000 to a
Max. of Rs.
25,00,000
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2 Max. loan
for studies
in Abroad
Rs. 15.00 Lacs Rs. 20.00 Lacs Not
Available
3 Interest
Rates
Upto Rs.4.00
lacs PTLR
Above Rs.4.00
lacs PTLR
+ 1%
Upto Rs. 4 lakh
10.50% p.a.
Above Rs. 4 lakh
11.50% p.a.
9.5% p.a +
10% service
tax + 2%
education
cess
4 Repayment
Period
starts from
one year after
completion of
course or 6
months after
securing a job,
whichever isearlier.
one year after
completion of
course or 6 months
after securing a job,
whichever is earlier.
Not
Available
5 Repayment
Period
To be repaid in
5-7 years after
commencement
of repayment
In India : Up to Rs.
7.5 lacs - 5-7 years
Above Rs. 7.5 lacs
-5-10 yearsIn Abroad : Up to
Rs. 15 lacs 5-7
years
Above Rs. 15 lacs
5-10 years
up to 4
years for
unsecured
loans and 7years for
secured
loans
(against
security of a
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residential
property /
shares).
6 Margin Upto Rs. 4.00
lacs :
Nil
Above Rs. 4.00
lacs :
Studies in
India 5%
Studies in
Abroad 15%
Upto Rs. 4.00 lacs
: Nil
Above Rs. 4.00 lacs
: Studies in
India 5%
Studies in
Abroad 15%
Not
Available
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
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8 Security Upto Rs. 4.00
lacs : No
Security
Above Rs. 4.00
lacs :
Collateral
Security of
Suitable value
(equivalent to
100% of the
amount of loan)
or co-obligation
of parents /
guardian / third
party.
Upto Rs. 4.00
lacs : No Security
Above Rs. 4.00 lacs
to Rs. 7.50 lacs :
Third Party
Guarantee
Above Rs. 7.50 lacs
to Rs. 10
lacs(India) :
Tangible Collateral
security for full
value of loan
Above Rs. 7.50 lacs
to Rs. 15
lacs(Abroad) :
Rs 15 lacs to Rs. 20
lacs (Abroad) :
Tangible Collateral
security for full
value of loan
Not
Available
QuestionnaireI, Chintaman Sankhala pursing M.B.A. from Sanghvi Institueof Management Science, Indore is undertaking a research onthe topic A Comparative Study of Professional &Traditional Programs Students Perception towardsEducational loan schemes regarding the same feedback
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is required from you which will be used strictly for academicresearch purpose only.
Questionnaire (please tick on the appropriate box to mark yourresponse)
Name________________________________________________________________Age ______
Gender Male Female
Pursuing M.B.A. B.E. B. Com.B.B.A.Family Income
Below 1, 00,000 per year
Rs. 1, 00,000 to Rs. 3, 00,000 per year
Rs. 3, 00,000 to Rs. 5, 00,000 per year
Above Rs. 500,000 per year
Que. 1 Have you ever acquired Educational Loan.
Yes No
Que. 2 Are you aware about the Educational Loans available in the
country?
Yes No
Que. 3 Which bank will you prefer for your educational loan
requirement?
State Bank of India (S.B.I.)
Punjab National Bank (P.N.B.)
Hong-Kong Shanghai Banking Corporation (H.S.B.C.)
Others _________________________________ (please specify)
Que. 4 Educational loans are preferred source of financing educationalfund requirement because
Interest rates charged on these loans is lesser
Educational loans are easily available
Repayment of such loans is not difficult
There is no other source of funds available to fund educational
expenses
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SerialNo. Statement
StonglyAgree Agree
NotSure
Disagree
StronglyAgree
1
Educational loans available frompublic banks are moreeconomical than those availablefrom private banks.
2
Educational loans of public
banks are more reliable thanthose of private banks.
3
Accquiring educational loan frompublic bank is much easier thanfrom private bank.
4
Educational loan schemes ofpublic banks are much flexiblethan the schemes of publicbanks.
5
Educational loan schemes ofpublic banks are much clear and
concise than the schemes ofpublic banks.
6
Private banks require highersecuritythan public banks while givingeducational loans.
7
Attitude of public banks is muchbetter than that of private bankswhile accquiring educationalloan.
8
Objective of private banks'
educational loan scheme is tomaximise profit.
9
Objective of public banks'educational loan scheme is tomaximise national and socialdevelopment.
10
Beneficiaries of the privatebanks' educational loan schemesare mainly economically affluentclasses.
11
Beneficiaries of the private
banks' educational loan schemesare mainly economically weakerclasses.
12
Interest rates of private banksare much higher than those ofpublic banks
13
Documentation charges ofprivate banks are higher thanthose of public banks
14
Acquiring educational loan frompublic bank is much timeconsuming than from privatebank.
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Thank you...............
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.
Up to Rs. 4.00 lacs : Nil
Above Rs. 4.00 lacs : Studies in India5%
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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
Banks should go for advertisement Campaign from
Scratch.
Banks should try to cash its brand image.
Strong branch network should be made and staff
personnels incentives should be increased.
Banks should increase its product line in education
loans.
Special scheme for non-professional students as well
as for professional students should be increased.
Banks should introduce some new model keeping in
mind the loan suitable for medium income group
customer.
References
BIBILIOGRAPHYBooks:-
Indian Financial System and Commercial (page no. 259)
Management of Indian Financial - R.L.Gupta
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Websites:-
www.pnbindia.com
www.statebankofindia.com
www.hsbc.com
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