DISSERTATION REPORT

COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE TO SBI, PNB AND HSBC

Declaration by the Candidate

I Anees Ahmad student of MBA IV of Institute of Aligarh muslim university centre murshidabad (2010-2012 bearing enrollment number GD-3968 hereby declare that the dessertatoin report titled COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE TO STATE BANK OF INDIA (SBI),PUNJAB NATIONAL BANK (PNB) AND HSBC.

Date:

( Sign of candidate

ACKNOWLEDGEMENT

It has been a great learning experience on this project entitled Comparative Study Of Education Loan With Reference TO SBI, PNB, And HSBC.

I would like to thank Prof. RASHID USMAN ANSARI for imparting knowledge and guidance to me in the field of Finance.

Table of Content

I. II.

Executive Summery Objective of the Research

Significance and scope of research Introduction to topic Company profile Research Methodology Data Interpretation and Analysis Findings and conclusion Suggestion and recommendation Limitations Bibliography

Annexure

Objective of Research

The Educational Loan Scheme aims at providing financial support from the bank to deserving/ meritorious students for pursuing higher education in India and abroad. The main emphasis is that every meritorious student is provided with an opportunity to pursue education with the financial support on affordable terms and conditions.

Significance and Scope of Education Loan

People are generally more aware now of the power and significance of education as a tool for improving life. They also know that education is no longer just something for children . Education is a lifelong and continuing activity. To organize continuing education more relevantly and meaningfully for empowering our people, we should have a vision of what education can achieve. Learning is not just limited to reading, writing and arithmetic. Learning is about improving ones knowledge, skills and attitudes to make life easier, fuller, longer and more enjoyable. Learning then has a practical purpose. It can help us to cope with the changing world socially, economically, culturally, physically and spiritually. Learning provides us with practical tools to improve the quality of life or to change it. Our efforts to educate ourselves should not top after the completion of primary schooling or a basic literacy programme . We should continue these efforts throughout our lives.Continuing education gives us opportunities to engage in lifelong learning.

INTRODUCTION Education loans can augment the boundaries of what you can achieve
Education never ends it is not said without reason. We are educated all our lives and getting an education not only is a great achievement but something that gives you the tools to find your own way in the world. Education is indispensable; little do we realize how much more it can bring to us in terms of worldly amplifications. Anyone can have propensity and the natural endowment for education. But one might not have the resources to finance their education. You certainly cant let lack of resources impede you from advancing your prospects through education. Then you accidentally stumble upon the word education loans. Loans for education you have never thought about it as a feasible arrangement. Education loans can open newer panoramas in regard to your education aspirations.

Education loans are open to all people in all its myriad forms. Education loans can realize your education plans or the education plans of your children. You can strengthen you own future and the future of your son or daughter with education loans. An extensive range of student and parent loans are presented under the category of education loans. There are many types of education loans. Discerning about the types of education loans will help you in making the accurate decision. The single largest resource of education loans is federal loan. The two main federal education loan programs are the Federal Family Education Loan Program and the Federal Direct

Loan Program. In the Federal Family Education Loan Program the bank, credit union or the school is the lender. While the federal direct loans program, the department of education is the lender.

Private education loans are offered to people so that they can provide financial backup to their education plans. Private education loans are not endorsed by other government agencies but are provided by other financial institutions. Private education loans program are optimum for both undergraduate and graduate studies.

Formal education is requisite for future success. Though this is not a hard and fast rule, but education certainly helps you in gaining an upper hand. With universities getting expensive by each day an education loan will certainly give you an incentive to go ahead with your education plans. Each year while contemplating on your education plans the thought of finances almost invariably comes in. While working towards you degree, you are constantly plagued about paying for the education fees, books, and other living expenses. Education loans can provide funding for tuition fees, board and room, books computer, and even student travel. An education loan can help you with all these expenses. Education loans are sufficient enough to take care of all these expenses. If you have been forced to drop your education for any reason, you can still take up your education at any point of time. Irrespective of your age and also where you have left your education.

There are no specific eligibility criteria for education loans. Any person who is in need of sponsorship for education can find an education loan that befits his or her financial necessity. Loan amount on education loans vary with the kind of education you want to pursue. The repayment options with education loans will similarly accommodate your personal financial preferences. You can either repay interest amount while still in school or six months after graduation. Education loans offer up to ten years for repayments. The refund alternatives on education loans also include deferment, forbearance and consolidation. The various sites on education loans can give you innumerable repayment options and monetary remuneration.

Education loans will help you in planning your life after graduation. However, an education loan like every loan is a huge financial obligation. An education loans is generally the first substantial loan for most people and therefore the first major expense. Do not be completely dependent on your education loans for the funding of your complete education. Try to apply for any other financial sustenance like university grants, scholarships, fellowships, work study programs and assistance ship and any other form of aid. This will certainly encourage a fluid dispensation of your education loans. You can start by going to the financial aid office in your school or university. It will provide you further insight to the kind of education loans, you must apply for.

Education is an experience of life. It is so rewarding in itself that it helps you to manage almost everything in your life. Education loans discipline your impulse towards education and training into a fruitful contrivance. The payoff is delicious in terms of improved quality of life. Education is expensive! Is it? With education loans it cant be. Now, you dont have to take the road in front of you. Make your own road with education loans.

About Punjub National Bank Punjab National Bank (PNB) is the second largest PSU bank in India in terms of business size. Bank has a 100% subsidiary PNB Investment Services Ltd. exclusively for Merchant Banking activities. has international presence in 9 countries, with a branch at Kabul, 2 branches in Hong Kong, representative offices at Almaty, Dubai, Shanghai and Oslo, a wholly owned subsidiary in UK (with 5 branches), and a joint venture with Everest Bank Ltd. Nepal. Currently, bank has ~4,951 branches and 57,000 employees. Bank is set to acquire 64% stake in JSC Dana Bank, Kazakhstan for $24 million by 2010 will help it expand its operations in central Asia and Russia. Further, bank is in the process of setting up of representative offices (RO) in Sydney and upgrading its RO in Norway to a full fledge branch and setting up a wholly owned subsidiary in Canada, head quartered at Vancouver. Punjab National Bank (PNB : BSE: 532461, NSE: PNB), is the third largest bank in India. It was registered on May 19, 1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore. Today, the Bank is the second largest state owned commercial bank in India with about 5000 branches across 764 cities. It serves over 37 million customers. The bank has been ranked 248th biggest bank in the world by the Bankers Almanac, London. The bank's total assets for financial year 2007 were about US$60 billion. PNB has a banking subsidiary in the UK, as well as branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai.

PUNJAB NATIONAL BANK (PNB) EDUCATION LOAN SCHEAMES

VIDYA LAKSHYAPURTI EDUCATION LOAN SCHEME

1.

OBJECTIVE
To provide financial support to deserving / meritorious students for pursuing education in India and abroad. The Scheme aims at providing financial assistance to meritorious students with an opportunity including undertaking basic education and to the meritorious students to pursue higher, professional and technical education.

2.

ELIGIBILITY

2(i)

Courses eligible

a)

Studies in India

School Education including Plus 2 stage

Graduation courses B.A., B.Com., B.Sc.,etc. Post Graduation courses : Masters & Ph.D.

Professional courses : Engineering, Medical , Agriculture, Veterinary, Law, Dental, Management, Computer etc.

Computer Certificate courses of reputed institutes accredited to Department of Electronics or institutes affiliated to University

Courses like ICWA, CA, CFA etc. Courses conducted by IIM, IIT, IISc, XLRI, NIFT, etc. Courses offered in India by reputed foreign University. Evening Courses of approved Institutes. Other Courses leading to Diploma / Degree etc. conducted by Colleges / Universities approved by UGC / Govt. / AICTE / AIBMS / ICMR etc. Courses offered by National Institutes and other reputed Private Institutes.

b)

Studies abroad

Graduation For job oriented professional / technical courses offered by reputed universities. Credentials of the Educational Institution may be got certified from authenticated sources / Embassy in India. Post Graduation MCA, MBA, MS etc. Courses conducted by CIMA London, CPA in USA etc.

2(ii) Student eligibility

Should be an Indian National Secured admission to Professional / Technical courses through Entrance Test / Selection process. Secured admission to foreign University / Institutions. Student should have secured pass marks in the qualifying Examination for admission to Graduation Courses.

2(iii) Expenses considered for Loan Fee payable to Collage / School / Hostel. Examination / Library / Laboratory fee. Purchase of books / equipments / instruments / uniforms.

Caution Deposit / Building Fund / Refundable Deposit supported by Institution Bills / Receipts.

Travel Expenses / Passage money for studies abroad. Purchase of computers essential for completion of the Course. Any other expense required to complete the course like study tours, project work, thesis, etc.

3.

QUANTUM OF FINANCE

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

Studies in India

Maximum Rs. 7.50 lacs.

Studies abroad

Maximum Rs. 15.00 lacs.

4.

MARGIN

Upto Rs. 4.00 lacs

Nil

Above Rs. 4.00 lacs

Studies in India

5%

Studies in Abroad 15%

Scholarship / assistantship to be included in Margin. Margin may be brought in on year-to-year basis as and when disbursements are made on a pro-rata basis.

5.

SECURITY

No Security may be insisted upon for loans upto Rs. 4.00 lacs. However, for loans above Rs. 4.00 lacs, Collateral Security of Suitable value (atleast equal to loan amount) or co-obligation of parents / guardian / third party alongwith assignment of future income of the student for payment of instalment may be obtained viz., :-

Upto Rs. 4.00 lacs

No Security.

Above Rs. 4.00 lacs :

Collateral Security of Suitable value (equivalent to 100% of the amount of loan) or co-obligation of parents / guardian / third party.

In addition to above assignment of future income of the student for payment of installments (stands included in the Agreement).

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

The security can be in the form of land / building / Govt. Securities / Public Sector Bonds / Units of UTI, NSC, KVP, LIC Policy, Gold, Shares / Debentures, Bank Deposit in the name of the student parent / guardian or any other third party with suitable Margin.

Wherever the land / building is already mortgaged, the unencumbered portion can be taken as security an II charge basis provided it covers the required Loan amount.

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

6.

RATE OF INTEREST

Upto Rs.4.00 lacs Above Rs.4.00 lacs

PTLR PTLR + 1%

 The interest to be debited monthly on simple basis during the Repayment holiday / Moratorium period. Penal interest @ 2% be charged for above Rs. 2.00 lacs for the overdue amount and overdue period.

7.

LONING POWERS

As per loaning Power Chart in force from time to time .

No application for educational loan received should be rejected without the concurrence of the next higher authority.

8.

REPAYMENT

Repayment Holiday / Moratorium

Course period + 1 year OR 6 months after getting job, whichever is earlier. -

The loan is to be repaid in 5-7 years after commencement of repayment. If the student is not able to complete the course within the scheduled time, extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course.

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

the principal and repayment in Equated Monthly Installments (EMI) be fixed. 1% Interest concession may be provided by Incumbents to lonees if the interest is serviced by them during the study period when repayment holiday is specified for interest / repayment under the Scheme. Interest concession is to be provided to borrowers only at the time of final repayment of the loan. 9.

POST SANCTION FOLLOW UP

Branches to contact college / university authorities to send the progress report at regular intervals in respect of students who have availed loans.

10.

UPFRONT FEE
NIL

11.

TIME NORMS

Loan applications have to be disposed of within a period of 15 days to one month but not exceeding the time norm stipulated for disposing of loan applications under Priority Sector Lending.

12.

CAPABILITY CERTIFICATE

Since, some of the foreign universities require the students to submit a certificate from their bankers about the sponsors solvency / financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies, capability certificate may be issued in such cases. For this financial and other supporting documents may be obtained from the applicant.

13.

LOAN APPLICATION
Form No. PNB 813.

14.

MODE OF APPLICATION OF INTEREST

Interest on Education Loan accounts shall be worked out at the end of each month and recorded on a separate sheet in the ledger but not debited to the borrowers account. Instead, it should be debited to a separate account opened in the Subsidiary General ledger titled Interest Accrued on Advances under Education Loan Scheme forming one of the components of the main head of General Ledger. Interest Accrued on Advances and credited to Revenue Head Income Interest on term loan till the commencement of repayment of first installment. On the date fixed for commencement of repayment, the whole amount of interest so far worked out and recorded as above should be debited to the borrowers account by corresponding credit to the Interest Accrued on Advances under Education Loan Scheme. Repayment of loan and interest may be determined keeping in view the above procedure for charging of interest.

15.

CONFIDENTIAL REPORTS
On Borrower(s): No confidential report on the borrower will be required as the application for loan will indicate the information required to be furnished in the confidential report. On Guarantor(s) / Co-obligants : Form No. PNB 905 /282(C).

16.
i)

DOCUMENTATION
Agreement (Annexure -1) duly stamped, to be taken in case where the student is minor. Further, in case of Minor student, on attaining his/her majority confirmation from student be obtained as per Annexure III.

ii)

Agreement (Annexure II) duly stamped , to be taken in case where the student is Major.

iii)

Letter of Guarantee (PNB 785) duly stamped as an Agreement to be taken in case of loan amount is above Rs. 4 lacs.

iv)

In case of collateral security is to be taken is mortgage, procedure given in Book of Instruction on Loans to be followed.

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

17.

DISBURSEMENT

Education loan is to be disbursed in the form of term loan. A limit up to which advance is to be allowed during each year will be set up. Each time the borrowing scholar is in need of funds to pursue his studies; he will approach the lending office and will explain his needs to the Incumbents Incharge will permit drawing on the borrowers account within the limit fixed. This will also enable the Incumbent Incharge to remain in close touch with the borrowing students activities.

The loan to be disbursed in stages as per the requirement / demand directly to the Institutions / Vendors of Books / equipments / instruments to the extent possible.

LOAN TO BE SANCTIONED BY THE BRANCH THE PLACE OF DOMICILE OF THE STUDENT.

NEAREST TO

In case of , purchase of stationary and books, loan may be disbursed in cash on declaration by the applicant and production of bills.

18.

CLASSIFICATION

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

19.

CHECK LIST

To facilitate expeditious disposal of applications, a check-list regarding documents, security etc. along with application forms for Education Loans be provided to intending borrowers. An illustrative check-list enabling a ready reference, so that intending borrowers can furnish all related documents / papers in one lot, is given below :-

Loan application on Banks format. Passport size photograph. Proof of Address. Proof of having secured pass marks in last qualifying examination. Letter of admission in professional, technical or vocational courses. Prospectus of the course wherein charges like Admission Fee, Examination Fee, Hostel Charges etc. are mentioned. Details of Assets & Liabilities of parents. In case loan amount is above Rs. 4.00 lacs :

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.

20.

POST SANCTION SUPERVISION

The Bank will reserve the right of giving loan under this Scheme to any scholar or continue / discontinue the yearly disbursement to a borrower under the Scheme, depending upon whether or not he / she shows good results at the institution he /she has joined for studies and whether of not reports about his / her conduct are satisfactory.

Such reports will be required to be produced to the Incumbents Incharge of the lending office before the start of each academic year subsequent to the first year.

Loan pass book (PNB589) be issued to the borrower containing details such as date of sanction of loan, amount of loan, amount of loan sanctioned, subsidy received

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

21.

OTHER CONDITIONS

Zonal Managers and above may consider relaxation with regard to Eligibility, Margin and Security norms on merits of each case.

No Due Certificate need not be insisted upon as a pre-condition for considering educational loan. However, Branches may obtain a declaration / an affidavit confirming that no loans are availed from banks.

(To be taken in case where the student is Minor) ANNEXURE I AGREEMENT FOR EDUCATION LOAN

This Agreement is made at_____________on this_______day of _____20 __ between Shri / Smt ____________________________, son / wife of Shri _________ ______ ___ r/o ________ ________ ______ (hereinafter referred to as parent / guardian) Sh. / Kumari _____________________ minor aged ________ years (date of birth _________), S/o / D/o Sh./ Smt. ____________________ r/o

______________________________ (hereinafter referred to as student), represented by his / her natural / court guardian Sh./ Smt. ____________________ (both parent / guardian and student are collectively called the borrowers which expression shall unless repugnant to context include his / her heirs, executors, administrators and assigns) of the One Part and Punjab National Bank a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 having its head office at 7, Bhikhaji Cama Place, New Delhi and amongst other a branch office at _______ _______ ______ ______ (hereinafter called the bank which term shall unless repugnant to context include its successors and assigns) of the Other Part.

WHEREAS
A)

Sh. / Smt ___________________ (parent / guardian) represents that his/ her ward Sh. / Kumari _________________(hereinafter called the student) is desirous of pursuing / continuing his / her studies at ______________________ for a period of __________ but is unable to do so due to paucity of funds.

AND B) The Borrowers have, with a view to receiving the financial assistance for studies of his/her ward, applied to the bank for a loan of Rs. ____________(rupees_____________________) which the bank has agreed to grant on terms and conditions herein arter appearing:

NOW THIS AGREEMENT WITNESSETH AS UNDER

1.

The total amount of the loan amounting to Rs. __________ will be disbursed by the bank to the borrowers as under :-

State the manner of disbursement

2.

The amount of loan will be utilized by the borrowers only for the purpose of persecuting studies of the student , such as payment of fees payable to college / school/ hostel, examination / library laboratory fee , purchase of books / equipment / instruments / uniform caution deposit / building fund /refundable deposit / supported by the institution bills / receipts, travel expenses / passage money for studies abroad, purchase of computersessential for completion of the course any other expenses required to complete the course- like study tour project work, thesis etc.

3.

At the end of each academic year, borrowers will produce a certificate from the head of the institution at which the student is studying testifying the results achieved by the student during and at the end of the year as well as about his conduct. If the said certificate is not produced or the certificate furnished for any year is not considered satisfactory the Bank will (in its absolute discretion) have the right of stop giving any further financial assistance to the borrower in terms of this agreement notwithstanding the

fact that the total amount of the loan as agreed to in paragraph above has not been disbursed to him. The Bank will be entitled as its option to recall the loan already , give together with the interested accrued thereon, by a demand in writing. Applicable in case loan is above Rs. 4.00 lac 4. The borrowers will secure the loan by providing a suitable surety an unless he has furnished the same he will not avail the loan or any part thereof. 5. The interest on the loan will be payable at the PTLR rate /_____% over the PTLR with ________rest. Provided that the interest payable by the borrowers shall be subject to change in interest rates made by RBI / Bank from time to time. (PTLR means Prime Term Lending Rate of the bank prescribe by the bank form time to time. The PTLR as on date is ______% p.a.) In the event of there not being any PTLR, the borrower agrees to pay interest at the rate as prescribed by the bank. 6. Subject to what is provided in para 3 above, the borrowers will repay the loan together with interest accrued thereon by equal monthly installments in _______ year after commencement of the repayment i.e. one year after the course period or 6 months after getting job, whichever is earlier. The extension of the repayment period, if the student is not able to complete the

course for reasons beyond his/her control, will be in the absolute discretion of the Bank.
7.

In the event of death of any of the borrowers, the bank shall be entitled not only not to disburse further loan but also recall the outstanding under the loan already disbursed, irrespective of the installments fixed.

8.

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

9.

The student-borrower under takes to remit and if need be, give instructions / authorization to his / her employer to remit, the salary to the extent necessary or even more , if the borrower so desires , to the account of the borrower.

In witness whereof the parties to these presents have set their hands on the day, month and year first mentioned above.

__________________________ BORROWERS FOR PUNJAB NATIONAL BANK

(Authorized signatory)

(To be taken in case where the student is Major) ANNEXURE II AGREEMENT FOR EDUCATION LOAN

This Agreement is made at_____________on this_______day of _____20 __ between Shri / Smt / Km. ____________________________, son / daughter of Shri _________ ______ ___ r/o ________ ________ ______ (hereinafter referred to as student) and Sh. / Smt. _____________________ son / daughter of____________________ r/o ______________________________ (hereinafter referred to as parent), (parent and student collectively hereinafter called the borrowers which expression shall unless repugnant to context include their heirs, executors, administrators and assigns) of the One Part and Punjab National Bank a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 having its head office at 7, Bhikhaji Cama Place, New Delhi and amongst other a branch office at _______ _______ ______ ______ (hereinafter called the bank which term shall unless repugnant to context include its successors and assigns) of the Other Part.

WHEREAS A) The Student and Parent (Borrowers) represents that Sh. / Kumari _________________(student) is desirous of pursuing / continuing his / her studies at ______________________ for a period of __________ but is unable to do so due to paucity of funds.

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

assistance for his/her studied, applied to the bank for a loan of Rs. ____________(rupees_____________________) which the bank has agreed to grant on terms and conditions herein arter appearing:

NOW THIS AGREEMENT WITNESSETH AS UNDER

1. The total amount of the loan amounting to Rs. __________ will be disbursed by the bank to the borrowers as under :State the manner of disbursement

2. The amount of loan will be utilized by the borrowers only for the purpose of persecuting studies of the student , such as payment of fees payable to college / school/ hostel, examination / library laboratory fee , purchase of books / equipment / instruments / uniform caution deposit / building fund /refundable deposit / supported by the institution bills / receipts, travel expenses / passage money for studies abroad, purchase of computers-essential for completion of the course any other expenses required to complete the course- like study tour project work, thesis etc.
3. At the end of each academic year, borrowers will produce a certificate from the

head of the institution at which the student is studying testifying the results achieved by the student during and at the end of the year as well as about his conduct. If the said certificate is not produced or the certificate furnished for any year is not considered satisfactory the Bank will (in its absolute discretion) have the right of stop giving any further financial assistance to the borrower in terms of this agreement notwithstanding the fact that the total amount of the

loan as agreed to in paragraph above has not been disbursed to him. The Bank will be entitled as its option to recall the loan already , give together with the interested accrued thereon, by a demand in writing. Applicable in case loan is above Rs. 4.00 lac 4. The borrowers will secure the loan by providing a suitable surety an unless he has furnished the same he will not avail the loan or any part thereof. 5. The interest on the loan will be payable at the PTLR rate /_____% over the PTLR with ________rest. Provided that the interest payable by the borrowers shall be subject to change in interest rates made by RBI / Bank from time to time. (PTLR means Prime Term Lending Rate of the bank prescribe by the bank form time to time. The PTLR as on date is ______% p.a.) In the event of there not being any PTLR, the borrower agrees to pay interest at the rate as prescribed by the bank. 6. Subject to what is provided in para 3 above, the borrowers will repay the loan together with interest accrued thereon by equal monthly installments in _______ year after commencement of the repayment i.e. one year after the course period or 6 months after getting job, whichever is earlier. The extension of the repayment period, if the student is not able to complete the course for reasons beyond his/her control, will be in the absolute discretion of the Bank.

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

not to disburse further loan but also recall the outstanding under the loan already disbursed, irrespective of the installments fixed. 8. The borrowers will, during the period of their indebtedness to the bank, keep the Bank informed of the change in their address, vocation and income from time to time. In witness whereof the parties to these presents have set their hands on the day, month and year first mentioned above. For self and as natural guardian/ guardian of Shri./ Kumari__________________________ BORROWERS FOR PUNJAB NATIONAL BANK (Authorized signatory)

ANNEXURE-III Date:_____________________ The Manager, Punjab National Bank, BO:___________________ Reg : My Education Loan For Rs._______ I write to confirm that you were pleased to grant Education Loan of Rs.____________ to me, represented by my guardian, Shri / Smt. _________________ for my education. My said guardian executed the required loaning documents in your favour in consideration of the said loan. I inform you that I have attained majority on ______________ and request you to disburse the remaining amount loan of Rs. _______________ to me out of the loan agreed to be granted by you. I am already and willing to execute any further documents in your favour for the said loan, if so required by you. I also confirm that the amount of loan of Rs. ___________ already disbursed to my benefit and the same is binding on me and I agree to repay the same with interest as agreed. I further undertake that I will repay the loan amount granted by the bank for my education, in terms of the agreement dated _______________ as executed by Shri / Smt. ______________________, my parents / guardian representing me , interalia from out of my future income and if need be , I will give instructions / authorization to my employer to remit the salary to the extent necessary or even more.

I will keep the bank informed of my address and my profession / employment from time to time. Yours Faithfully ____________________ (Borrower) Address:-_______________________

STATE BANK OF INDIA (SBI) EDUCATION LOAN SCHEAMES

SBI EDUCATION LOAN

A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured. 1.

ELIGIBLE COURSES

All courses having employment prospects are eligible.

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

2.

EXPENSES CONSIDERED FOR LOAN

Fees payable to college/school/hostel Examination/Library/Laboratory fees Purchase of Books/Equipment/Instruments/Uniforms Caution Deposit/Building Fund/Refundable Deposit Travel Expenses/Passage money for studies abroad Purchase of computers considered necessary for completion of course Cost of a Two-wheeler upto Rs. 50,000/-

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

3.

AMOUNT OF LOAN
For studies in India, maximum Rs. 10 lacs Studies abroad, maximum Rs. 20 lacs

4.

INTEREST RATE

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

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

5.

PROCESSING FEES

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

6.

REPAYMENT TENURE

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

Repayment Period Place of Study Loan Amount in Years In India Up to Rs. 7.5 lacs Above Rs. 7.5 lacs Abroad Up to Rs. 15 lacs Above Rs. 15 lacs 5-7 5-10 5-7 5-10

Security
Amount Studies In India Upto Rs. 4 lacs No Security Above Rs. 4 lacs to Rs. 7.50 Third Party Guarantee lacs Above Rs. 7.50 lacs to Rs. 10 Tangible Collateral lacs(India)/ Rs. 15 lacs(Abroad) Rs 15 lacs to Rs. 20 lacs security for full value of loan ___ full value of loan Studies Abroad No Security Third Party Guarantee Tangible Collateral security of suitable value of loan or third party guarantee Tangible Collateral security for

7.

MARGIN

For loans up to Rs.4.0 lacs : No Margin

For loans above Rs.4.0 lacs:

o o

Studies in India: 5% Studies Abroad: 15%

8.

DOCUMENTATION REQUIRED
Completed Education Loan Application Form. Mark sheets of last qualifying examination Proof of admission scholarship, studentship etc Schedule of expenses for the specified course 2 passport size photographs Borrower's Bank account statement for the last six months Income tax assessment order, of last 2 years Brief statement of assets and liabilities, of the Co-borrower Proof of Income (i.e. Salary slips/ Form 16 etc)

* Conditions Apply

Documents to be enclosed i. Mark sheet of last qualifying examination for school and graduate studies in India. Copies of letter conferring scholarship, freeship, studentship etc.

ii.

iii.

Documents evidencing the duration of course and commencement thereof viz.

prospectus or certificate from the competent authority of the institution. iv. Proof of admission to the course. v. Schedule of expenses for the course. vi. Two copies of passport size photograph of the borrower(s) / guarantor(s). vii. Statement of Bank account for the last six months of the borrower(s) viii. Signature identification from bankers of borrower(s) guarantor(s). ix. A copy of Passport/Voters ID Card/Proof of residence. For salaried persons i. Latest salary slip showing all deductions. ii. Employment details for the last 5 years. iii. Latest TDS Certificate Form 16. iv. Statement of assets and outstanding liabilities. For Self-Employed/Professionals and Businessmen Proof of income.

Income Tax/Wealth Tax (if applicable) assessment orders not more than 2 years old.

Assets and Liabilities.

If Collateral Security is Mortgage of Landed Property Original Sale Deed

Original receipt of payment made for registrar Society share certificate Non encumbrance or certificate from advocate Valuation Report

HSBC EDUCATION LOAN SCHEAMES

FEATURES AND BENEFITS Get financial flexibility with HSBC educational loans LOAN AVAILABILITY Our educational loans are available for studies in India or abroad. Avail of loan amounts ranging from a minimum of Rs. 50,000 to a maximum of Rs. 25,00,000*.

SMOOTH REPAYMENT
Our Equated Monthly Installments (EMIs) scheme allows for easy repayment and saves you from hassles. Flexibility Our loans are tailor-made to your needs. Opt for tenures up to 4 years for unsecured loans and 7 years for secured loans (against security of a residential property / shares).

COMPREHENSIVE COVERAGE
Our Educational loan also covers expenses for boarding and lodging.

HSBC banking benefits Take advantage of HSBC's banking benefits; let us help you open a Savings account or avail of a debit card.

LOW INTEREST RATES

We offer you competitive interest rates on your educational loans. We also give you the option of choosing between a fixed or floating rate of interest (the floating rate option is available only in case of secured loans). Special Relationship Discounts You are also eligible for special discounts exclusively designed for HSBC customers (of 6 months or more).

* Loans above Rs.500,000 are available against security of residential property/shares. Loans to value ratio to be less than or equal to 50% of the property valuation. Loans available for study at select institutes, based on their accreditation.

The interest rate on your floating rate Home loan is linked to HSBC's Mortgage Lending Rate (MLR) and any revision in the MLR would impact your interest rate. The MLR is currently 9.5%. Terms and conditions apply. All loans at the sole discretion of The Hongkong and Shanghai Banking Corporation Limited, India. Loans available for applicants and properties in and around the limits of cities where HSBC has branches and is subject to change from time to time. Please be advised that vide Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a service tax of 10% + 2% education cess thereon will be applicable on our fees and charges.

ELIGIBILITY

To qualify for an Educational Loan, the following criteria apply. 1 2 Applicant should be a resident Indian Minimum net annual income of Rs 150,000 for secured loan and Rs

75,000 for unsecured loan 3 Student must have secured admission to a recognized college/university

in India or abroad* * Loans available for study at select institutes, based on their accreditation

The interest rate on your floating rate Home loan is linked to HSBC's Mortgage Lending Rate (MLR) and any revision in the MLR would impact your interest rate. The MLR is currently 9.5%. Terms and conditions apply. All loans at the sole discretion of The Hongkong and Shanghai Banking Corporation Limited, India. Loans available for applicants and properties in and around the limits of cities where HSBC has branches. Vide Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a service tax of 10% + 2% education cess thereon will be applicable on our fees and charges.

EDUCATIONAL LOAN APPLICATION FORM

First Name Middle Name Last Name Address City Telephone Mobile Email Date of Birth Convenient time to contact you Between and Are you interested in a free session on overseas studies with an Educational Counsellor Details of the Educational Institute you are planning to study at : Name Country

Are you an existing HSBC customer? If yes, please provide us the Card No or Account No Account No. Credit Card No.

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY
Project Title: Comparative study of Education Loan with reference to PNB, SBI and HSBC.

To compare education loan schemes & policies of the Punjab National Bank (PNB), State Bank of India (SBI) and Hong-Kong Shanghai Banking Corporation (HSBC)

Methodology: Research Design: Exploratory Data Source:

Primary Internal bank circular

Secondary

Information from bank websites.

Current Interest Rates

Effective January 1, 2006 - March 31, 2006

Interest Rate 9.18% 9.18% 9.48% 9.48% APR* 9.97% 9.97% 12.80% 10.35%

Undergraduate/Career Education Graduate/Professional Continuing Education K-12 Education

The interest rate for Education One loans is adjusted quarterly and based on the LIBOR index plus a margin depending on the loan program and/or your credit history. This margin can be 4.65%, 4.95%, or 7.25%. *APR (Annual Percentage Rate) is the effective interest rate when the origination fee and interest charges are included. Please see APR Repayment Example below. Repayment Example: $10,000 for 20 Years for Undergraduate/Career Education and Graduate/Professional Education Loans Annual Percentage Rate (APR) Example If a student borrows $10,000 and chooses Repayment Option 3 (deferred principal and interest), and has a 4-year deferment period (48 months), and the variable interest rate

remains constant at 9.18% over both the 4-year deferment period and the 20-year repayment period, and the origination fee is 6.5%, the monthly payment would be $133.26, the APR would be 10.87% during deferment and 9.18% during repayment, and the total finance charge would be $21,982.40. Note: Example is based on a three-month average of the one-month LIBOR of 4.53% as of 04/01/06. Origination fee may vary based on loan type, repayment option, credit, and whether a cosigner is included. Interest rate and fees may vary slightly for Continuing Education and K-12 loans.

CONCLUSION

CONCLUSION Sl. No.

1. Beneficiaries Economically affluent sections of society. 2. 3. 4. 5. 6. 7. Objective Aimed at Margin money Security Interest rate Attitude Commercial Profit earning Must Necessary High Rigid and strict Economically weaker Sections also. National and social Not profit alone Flexible Less important Reasonable Flexible and liberal

Parameter

Private Banks

Public Banks

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.

Presence of some famous personality in Advertisement or in Pamphlets insuring better retention in the mind of customers.

In this age of information, the customer before taking loans collects all the information about various brands. The banks should provide a combined booklet of the product range in order to upgrade the knowledge of future takings of loans.

BIBILIOGRAPHY Websites:

www.pnbindia.com www.statebankofindia.com www.hsbc.com www.google.com

Books: Indian Financial System and Commercial Banking