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PROJECT

ON
Educational Loan
Of
Central Bank of India

Under supervision of:

Submitted by:
ACKNOWLEDGEMENT

“Acknowledgement is an art, one can write glib stanzas


without meaning a word, and on the other hand
one can make simple expression of gratitude.”
Though the language is a poor substitute for sentiments,
yet there is no way out to recover to it for
expressing my profound gratitude, indebtedness
and sincere regards to _____________for being
my Research guide. It was under his constant
guidance that I have been able to complete my
project and make it a great learning experience.
CONTENTS

1. Scope, limitations and research methodology of study

2. Introduction to loans
• Loans
• Types of loans

3. Introduction of educational loan

4. Introduction to central bank of India:

• History
• Recent news/initiatives

5. Various loans offered by cbi

6. Comparison of educational loan rates of CBI, HSBC, ICICI

7. Concession given to aim’s by cbi

8.Cent Vidayarthi scheme of cbi

9.Conclusion and recommendations

10.Bibliography
Title of the Study
Loans are the most versatile form of lending. That’s why I take the title of
the study of my project as “Analysis of loans in India with special reference
to “CENTRAL BANK OF INDIA”.

Scope of loans
The scope of the loans is vast. It deals with that topic of income eligibility,
Annual or monthly installments, late payment charges, interest rates. In this
Study above points are taken to compare the loan of cbi bank with respect to
Other issuers of loans. By this way of studying we can find out the image of
the cbi educational loan with other financial institutions.

Type of Research:
This is basically an analytical study. The study aims at analyzing the impact
of loans on the consumers.

Source of data collection:


In this study, both primary and secondary data have been used. The
required secondary data is collected through direct newspapers and internet
Primary data is collected by gaining information by the manager of central
bank of India tilak nagar branch.
Type of analysis of data:
Classification and tabulation is carried out on the surveys collected.
Inferences are drawn on the surveys. Charts and tables are presented to
improve the presentation of the report.
Some surveys collected from different newspaper are also represented in
form of tables to improve efficiency and clarity of the study.

Limitations of the study:


The study faces many limitations like any other research. However, these
Limitations cannot have a drastic impact on the conclusions and
Recommendations of the study as these limitations are within manageable
Limits. Some of the limitations are as follows:
The coverage of more number of banks was not highly successful because of
The time limit and the adequacy in collection of data.
High degree of accuracy is doubtful as the findings are based on the premise
That has given factual information. Hence, an allowance should be made
for deviations and errors.
Being a purely academic-based project, it has been limited to certain
particular areas of study of educational loan.
Loan
Definition
An arrangement in which a lender gives money or
property to a borrower, and the borrower agrees to
return the property or repay the money, usually along with,
at some future point(s) in time. Usually, there is a
predetermined time for repaying a loan, and generally the
lender has to bear the risk that the borrower may not repay
a loan.

A loan is a type of debt. Like all debt instruments, a loan entails the
redistribution of financial assets over time, between the lender and
the borrower.
In a loan, the borrower initially receives or borrows an amount
of money, called the principal, from the lender, and is obligated
to pay back or repay an equal amount of money to the lender at a
later time. Typically, the money is paid back in regular installments, or
partial repayments; in an annuity, each installment is the same
amount. The loan is generally provided at a cost, referred to
as interest on the debt, which provides an incentive for the lender to
engage in the loan. In a legal loan, each of these obligations and
restrictions is enforced by contract, which can also place the borrower
under additional restrictions known as loan covenants. Although this
article focuses on monetary loans, in practice any material object
might be lent.
Acting as a provider of loans is one of the principal tasks for financial
institutions. For other institutions, issuing of debt contracts such
as bonds is a typical source of funding.
Types of loans

Secured

Secured loan is a loan in which the borrower pledges some


asset (e.g. a car or property) as collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by


many individuals to purchase housing. In this arrangement, the
money is used to purchase the property. The financial institution,
however, is given security — a lien on the title to the house — until
the mortgage is paid off in full. If the borrower defaults on the loan,
the bank would have the legal right to repossess the house and sell it,
to recover sums owing to it.
In some instances, a loan taken out to purchase a new or used car
may be secured by the car; in much the same way as a mortgage is
secured by housing. The duration of the loan period is considerably
shorter
Unsecured

Unsecured loans are monetary loans that are not secured against the
borrower's assets. These may be available from financial institutions
under many different guises or marketing packages:

 credit card debt


 personal loans
 bank overdrafts
 credit facilities or lines of credit
 corporate bonds

The interest rates applicable to these different forms may vary


depending on the lender and the borrower. These may or may not be
regulated by law. In the United Kingdom, when applied to individuals,
these may come under the Consumer Credit Act 1974.

Demand
Demand loans are short term loans that are atypical in that they do not have
fixed dates for repayment and carry a floating interest rate which varies
according to the prime rate. They can be "called" for repayment by the
lending institution at any time. Demand loans may be unsecured or secured.

Loan payment
The most typical loan payment type is the fully amortizing payment in
which each monthly rate has the same value overtime. It varies with
the type if loan
Education Loans

Educational loans work like any other debt. That is, loans
are simply specific money that you borrow from a bank, a
private lender, or some other type of lender. Afterwards,
you must repay your debts with interest. However, unlike
other types of loans, educational loans are different in
several respects

Getting best education loan

Most students and parents today realize how expensive an


education is. Whether you hope to study at a private high
school, a college, university, or an overseas school, tuition
costs plus the costs of books and living can quickly add up.
If you are worrying about the cost of school, you should not
feel that money has to decide your education. There are a
number of financial aid options that can help you.
Educational loans can be one important part of your overall
financial aid package. There are special distance
education loans, need-based loans, college loans,
government based loans, and private education loans -- in
fact, chances are excellent that there are educational loans
that can meet your specific needs. One should keep in mind
these things before taking education loan-

The lending sector has commendably recognized the hurdle for these
students and has acted upon the issue to make higher education
feasible by introducing the facility of easy loans for students. The
most beneficial feature of the creation of these types of loans is that

They are easy to acquire. Student usually have a very liberalized set
of terms and conditions governing them, which hence makes them
apt for the purpose for which they have been created - grant of loan
assistance for education.
Scholarships were one of the traditional grants that were provided to
students who had a greater strength to assimilate knowledge. The
scholarships were of formal and informal nature in the earlier times,
and it was also viable for rulers, governments, nobility and
universities to nurture the process of learning within the intelligence of
the selected few, by the provision of scholarships. The advancement,
expansion and spurt of science, commerce and arts after the
Renaissance has made the sphere of learning and education so
extensive that it is beyond the reach of the government to provide
fiscal assistance to all scholars who wish to embark upon a voyage of
scholastic learning.

The fast, easy student loans have thus increased the probability of
more and more students undertaking higher education. The credit
reach of lenders who are willing to induct new loan schemes into their
already existing segments have started taking up new student loans
based in the seed of time. To name a few we may state loans such
as, 'Easy Private Student Loans' or 'Quick and Easy Student Loans'
or 'Easy Student Loans with Bad Credit'.

Some of the outstanding and notable features of the student loans


that are easy to get, have been observed in the following paragraph.

In a quick sweep it can be said that as these loans are student loans,
easy approval is the most evident feature. The approval of this type of
loan basically depends upon the meritorious records of the applicant.
The other two factors that play a deciding role are the credit history of
the student and the fiscal consideration that has to be paid for the
higher education. The current credit rating and scores are not deeply
assessed, which makes the process faster and hassle free.

The second merit of these types of loans is the regulation that is


implemented by the government regarding the provision of easy
loans for students. The governments, recognizing the indigenous
capabilities, prohibit the lenders from levying heavy rates of interests

Upon the use of the easy loans for students. The Ministries of
Education also maintain a strict check on the approval process of
these loans which makes student loans easy to get

The third merit is the privilege of installments of the easy loans for
students. The installments of these loans start after the student
successfully completes his/her education. The total amount of the
loans is repaid over a reasonably spanned time period and a minimal
rate of interest is levied.

1. Interest rates
the first and the foremost is the interest rates charged on
the education loan. This interest rate is the primary factor
that earns money for banks and so they want it to be
higher, but the competition in the loan market makes the
bank keep it to a level where the education loan seems
affordable to the customer, while it earns money for the
banks too. Whether the interest rate charged on your
education loan is fixed or floating is also a matter of
concern. Generally, the value of fixed interest rates is higher
than the floating interest rates. Going for floating interest
rates in this low interest regime is always a better option.

The interest rates also depend on the amount of education


loan one wants, keeping in mind all the realistic
requirements, a judicious comparison of various offers from
leading banks will certainly help the student find an
education loan that pinches the least.

2. How the interest is charged


though the banks defer repayments, but they start charging
the interest immediately after the disbursal of the loan. How
this interest is charged will determine the amount of interest
you will pay. Enquire carefully whether it is charged on a
daily reducing balance, or on a quarterly reducing balance.
The interest rates charged on loans thus keep accumulating
until you start the repayments. This can significantly
increase the repayment burden. If the bank providing
education loan gives an option to pay the interest portion of
your education loan immediately, use it by all means.

3. The waiver period


the third most important thing to watch out is the waiver
period. Banks providing education loans generally don't
expect the student to pay until he gains employment after
completion of the course. Check this out carefully, does your
education loan provider gives you such an option? The whole
idea is to get comfortable financially before the bank asks
you for a repayment.

4. Fees and other costs


the fees associated with the education loan such as
processing fees, administrative fees, documentation costs
etc. should be minimal.

5. Collateral, guarantee or security


there is a collateral clause with all the educational loans
from banks in India provided the education loan exceeds a
value of 4 laces. This figure can vary from bank to bank but
it is generally a norm. Make sure to ask the bank
about collateral requirements and have it ready before the
disbursal of loan.

6. The down payment


A down payment also has to be made with every education
loan, ranging between 5%-20% of the loan amount
depending on banks this money has to be paid upfront.

REVISED MODEL EDUCATIONAL LOAN SCHEME FOR


PURSUING HIGHER STUDIES IN INDIA AND ABROAD

1. INTRODUCTION:

Education is central to the Human Resources Development


and empowerment in any country. National and State level
policies are framed to ensure 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.

The scope of education has widened both in India and


abroad covering new courses in diversified areas.
Development of human capital is a national priority and it
should be the endeavour of all that no deserving student is
denied opportunity to pursue higher education for want of
financial support. Loans for education should be seen as an
investment for economic development and prosperity.
Knowledge and information would be the driving force for
economic growth in the coming years.

Based on recommendations made by a Study Group, IBA had


prepared a Model Educational Loan Scheme in the year 2001
which was advised to banks for implementation by Reserve
Bank of India vide circular
No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28,
2001 along with certain modifications suggested by the
Government of India. In line with the announcement made
by the Hon'ble Finance Minister in his Budget Speech for the
year 2004-05, IBA had communicated certain changes in the
security norms applicable to educational loans with limits
above Rs.4 lakhs and up to Rs. 7.5 lakhs.

We have been receiving enquiries from members seeking


clarifications on the various provisions of the scheme based
on feedback received from the branches. With a view to
ensure that the scheme is implemented in letter and spirit, it
was decided to review the scheme and make modifications
in the scheme to facilitate smooth operation at bank
branches. Towards this, a Working Group of General
Managers drawn from select banks was constituted at IBA.
This revised model scheme has been prepared based on the
suggestions made by the Group.

2. OBJECTIVES OF THE SCHEME :

The Educational Loan Scheme outlined below aims at


providing financial support from the banking system to
deserving/ meritorious students for pursuing higher
education in India and abroad. The main emphasis is that
every meritorious 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.

3. APPLICABILITY OF THE SCHEME:

The scheme detailed below could be adopted by all


Commercial Banks. The scheme provides broad guidelines to
the banks for operationalising 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 customer friendly.

The scheme details are as under :

4. ELIGIBILITY CRITERIA :
4.1 Student eligibility:

Should be an Indian National


 Secured admission to professional/ technical courses in
India or Abroad through Entrance Test/ Merit Based
Selection process.

4.2 Courses eligible

a. Studies in India: (Indicative list)

 Graduation courses : BA, B.Com., B.Sc., 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 etc.
 Regular Degree/Diploma courses like Aeronautical, pilot
training, shipping etc., approved by Director General of Civil
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.
 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 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.

b. 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.

4.3 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 work, thesis, etc.

5. 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

6. MARGIN :

Upto Rs 4 lacs Nil


Above Rs. 4 lacs :
5%
Studies in India
15
Studies Abroad
%

- 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.

7. SECURITY :

Upto Rs Co-obligation of parents.


4 lacs No security
Co-obligation of parents
together with collateral
security in the form of
Above suitable third party
Rs.4 lacs guarantee. The bank may, at
and upto its discretion, in exceptional
Rs7.5 cases, waive third party
lakhs guarantee if satisfied with the
net-worth / means of parent/s
who would be executing the
document as "joint borrower".
Co-obligation of parents
together with tangible
Above collateral security of suitable
Rs.7.5 value, along with the
lakhs assignment of future income
of the student for payment of
instalments

Note:-

• 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, 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.

8. RATE OF INTEREST :

Upto Rs 4
BPLR
lacs
Above Rs. 4 BPLR +
lacs 1%
 Simple interest to be charged during the Repayment
holiday/ Moratorium period.
 Penal interest to be charged as applicable to individual
banks.

9. APPRAISAL / SANCTION/ DISBURSEMENT :


 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.

10. REPAYMENT:
Repayment Course period + 1 year or 6 months
holiday/Moratorium after getting job, whichever is earlier.

The loan to be repaid in 5-7 years after commencement of


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

 The accrued interest during the repayment holiday period


to be added to the principal and repayment in Equated
Monthly Instalments (EMI) fixed.
 1% interest concession may be provided for loanees if the
interest is serviced during the study period when repayment
holiday is specified for interest/ repayment under the
scheme.

11. INSURANCE

Banks may arrange for life insurance policy on the students


availing Educational Loan. Individual Banks may work out the
modalities with insurance companies

12. 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.

13. PROCESSING CHARGES

No processing/ upfront charges may be collected on


educational loans for studies in India.

14. 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.)

Bad credit
Having bad credit simply means that you had trouble in the
past paying your bills on time. You may have bad credit
because you have been the victim of identity theft, because
you have taken out too many loans, or, most likely, you
simply have not paid all your bills promptly. While bad credit
can make it harder for you to get the best loan rates -- or
even any credit at all - today's bad credit education loans
allow you to borrow money for your education. A bad credit
education loan typically has different applications standard
and eligibility standards, making it easier for even those with
an imperfect credit history to get the best education
possible. Education loans for bad credit are widely available
from private lenders and from other sources. When it comes
to bad credit education loan, student options are numerous,
allowing almost anyone to get the money they need for
school.

How to Get Loans with Bad Credit

If you don't need education loans right away, there are


several things that you can do to improve your bad credit.
This can help you qualify for better interest rates and may
even allow you to qualify for traditional educational loans: If
you don't have much of a credit history, consider getting a
few bills signed over to your name and open a checking
account. By paying your bills on time and balancing your
account, you can build a good credit history. If you already
have credit cards or loans, work hard at paying down your
loans as much as possible.

Banks

One of the important functions of the Bank is to accept


deposits from the public for the purpose of lending. In fact,
depositors are the major stakeholders of the Banking
System. The depositors and their interests form the key area
of the regulatory framework for banking in India and this has
been enshrined in the Banking Regulation Act, 1949. The
Reserve Bank of India is empowered to issue directives /
advices on interest rates on deposits and other aspects
regarding conduct of deposit accounts from time to time.
With liberalization in the financial system and deregulation
of interest rates, banks are now free to formulate deposit
products within the broad guidelines issued by RBI .

This policy document on deposits outlines the guiding


principles in respect of formulation of various deposit
products offered by the Bank and terms and conditions
governing the conduct of the account. The document
recognises the rights of depositors and aims at
dissemination of information with regard to various aspects
of acceptance of deposits from the members of the public,
conduct and operations of various deposits accounts,
payment of interest on various deposit accounts, closure of
deposit accounts, method of disposal of deposits of
deceased depositors, etc., for the benefit of customers. It is
expected that this document will impart greater
transparency in dealing with the individual customers and
create awareness among customers of their rights. The
ultimate objective is that the customer will get services they
are rightfully entitled to receive without demand.

While adopting this policy, the bank reiterates its


commitments to individual customers outlined in Bankers'
Fair Practice Code of Indian Banks' Association. This
document is a broad framework under which the rights of
common depositors are recognized. Detailed operational
instructions on various deposit schemes and related services
will be issued from time to time

Introduction of CBI
Central Bank of India, a government-owned bank, is one of the oldest and
largest commercial banks in India. The bank currently has 3,168 branches
and 270 extension counters across 27 Indian states.

Mr. S Sridhar [Ex CMD National Housing Bank] has been appointed as the
Chairman and Managing Director of state-run Central Bank of India as on 2
March 2009. The post had been lying vacant and the appointment was
cleared by the government, the Bank said in a statement. To improve the
Bank's capital adequacy ratio and enable it to support the credit requirements
of the productive sectors of the economy, the Centre has recently decided to
infuse Rest 1,400 core in the Bank. Under the proposed capital infusion
plan, Central Bank of India will get Rs 700 crore by this month-end, while
the balance amount will be made available to the Bank in next fiscal.

Central bank of India is one of 18 Public Sector banks in India to get


recapitalisation finance from the government over the next 24 months. The
infusion of fund will improve the financial health of the banks as their
capital adequacy ratio (CAR) will be raised more than desired level of 12
percent. The increase in CAR of the banks will also enable them to lend
more money. The CAR of Central Bank of India was less than 12 percent as
on June 30 2006.

The wholly-owned public sector bank, based in Mumbai, will convert an


amount of Rs. 800 crore out of its Rs. 1,124.14-crore total equity capital into
perpetual non-cumulative preference shares.The preference shares would
carry an annual floating coupon rate of eight per cent, which would be
benchmarked to 100 basis points above the repo rate. It will shore up the
balance-sheet of the bank and enable it to raise capital from the markets.

According to an official statement, the equity capital restructuring would


lead to an improvement in the bank's credit rating as also facilitate the
adoption of Basel II norms.

For financial year 2008-2009, Central Bank of India's Q3 standalone net


profit went up at Rs 353.26 crore from Rs 201.01 crore (YoY). The bank's
standalone net interest income, NII was up at Rs 671.94 crore versus Rs
544.85 crore (YoY).
At a time when the global banking industry is feeling the pinch of the global
credit crunch, Central Bank of India is planning to expand its foreign
presence. The public-sector lender has approached the Reserve Bank of
India (RBI) for permission to open representative offices in five locations -
Singapore, Dubai, Doha, London and Hong Kong. This is the first time the
bank is venturing an independent overseas foray after the Sethia scam in the
1970s forced the bank to close down its London office. RBI had then asked
the other two banks, who had operations in London, to close down.

As on March 31, 2006, the bank's reserves and surplus stood at Rs. 1,810.19
crore. Its total business at the end of the last fiscal amounted to Rs. 1,05,677
crore.The bank had a staff strength of 37,241 as on Nov 2006.

Central Bank of India partnered with TCS[ Tata Consultancy Services ] for
its Core Banking Solution. The solution set to be implemented will include
B@NCS from Sydney-based Financial Network Solutions (FNS), Exim
Bills Trade Finance software from China Systems and eTreasury from TCS.
With 703 banks in the core banking system (CBS), it was planned that by
the end of March 2008 a total of 1,000 branches would be brought under the
CBS.As of 31 March 2006, the bank achieved a landmark: crossing a
business mix of Rs. 1,05,000.00 crores. The next target has been fixed at
doubling this figure in the next three years. Krishnan Subharamaniam,
Executive Director of the bank, in his message to staff members, has called
upon them to achieve the target and suggested some steps. One of these
steps is to change the manner in which employees extend service to
customers across different delivery channels. He has advocated the adoption
of the '3R' principles when dealing with customers - recognition, respect and
response. This is asserted to be the path to make customers experience
'Customer

Delight'. Subbaraman is of the view that to be able to achieve the coveted


goal of at least Rs.2,00,000.00 crores in three years' time

History
It was established in 1911 by Sir Sorabji Pochkhanawala and claims to have
been the first commercial Indian bank completely owned and managed by
Indians.

In 1923, it acquired the Tata Industrial Bank in the wake of the failure of
the Alliance Bank of Simla.

In 1969, the Indian Government nationalized the bank on 19 July, together


with 13 others. ]

Established in 1911, Central Bank of India was the first Indian commercial
bank which was wholly owned and managed by Indians. The establishment
of the Bank was the ultimate realisation of the dream of Sir Sorabji
Pochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first
Chairman of a truly 'Swadeshi Bank'. In fact, such was the extent of pride
felt by Sir Sorabji Pochkhanawala that he proclaimed Central Bank of India
as the 'property of the nation and the country's asset'. He also added that
'Central Bank of India lives on people's faith and regards itself as the
people's own bank'.

During the past 98 years of history the Bank has weathered many storms and
faced many challenges. The Bank could successfully transform every threat
into business opportunity and excelled over its peers in the Banking
industry.

A number of innovative and unique banking activities have been launched


by Central Bank of India and a brief mention of some of its pioneering
services are as under:

1921 Introduction to the Home Savings Safe Deposit Scheme to build


saving/thrift habits in all sections of the society. 1924 An Exclusive Ladies
Department to cater to the Bank's women clientele. 1926 Safe Deposit
Locker facility and Rupee Travellers' Cheques. 1929 Setting up of the

Executor and Trustee Department. 1932 Deposit Insurance Benefit Scheme.


1962 Recurring Deposit Scheme.
Subsequently, even after the nationalisation of the Bank in the year 1969,
Central Bank continued to introduce a number of innovative banking
services as under:

1976 The Merchant Banking Cell was established. 1980 Centralcard, the
credit card of the Bank was introduced. 1986 'Platinum Jubilee Money Back
Deposit Scheme' was launched. 1989 The housing subsidiary Cent Bank
Home Finance Ltd. was started with its headquarters at Bhopal in Madhya
Pradesh. 1994 Quick Cheque Collection Service (QCC) & Express Service
was set up to enable speedy collection of outstation cheques.

Further in line with the guidelines from Reserve Bank of India as also the
Government of India, Central Bank has been playing an increasingly active
role in promoting the key thrust areas of agriculture, small scale industries as
also medium and large industries. The Bank also introduced a number of
Self Employment Schemes to promote employment among the educated
youth.Among the Public Sector Banks, Central Bank of India truly described
as an All India Bank, due to distribution of its large network in 27 out of 28
States as also in 4 out of 7 Union Territories in India. Central Bank of India
holds a very prominent place among the Public Sector Banks on account of
its network of 3413 branches and 237 extension counters.

.
Loans offerered BY
cbi

1. Schemes of interest subsidiy for housing the urban


poor

2. Cent kisan gold card

3. Cent buy

4. Cent computer loan

5. Cent home loan plus scheme

6. Housing finance scheme

7. Cent jewel

8. Cent kalvani

9. Cent liquid scheme

10. Cent mortgage

11. Cent multipurpose

12. Cent pensioners drawing pension

13. Cent loan scheme(corporate)

14. Cent loan scheme(non cotrporate)


15. Cent loan to commission to lic agents

16. Cent loan to teachers to teachers

17. Cent rentals

18. Cent safar

19. Cent school

20. Cent swabhiman

21. Cent suvidha

22. Cent vehicle

23. Cent vidyarthi

24. Cent trade

25. Educational loan to students of iim

26. Cent vivah


Central Bank of IndiA
Education Loan

Introduction

Central bank of India provides loan to poor and needy so that they can take
up basic education and to the student/ employed persons to pursue higher
education. Loan can be applied for studies in India and abroad for
graduation, post graduation, diploma / degree courses, etc.
Cent Vidyarthi Loan. It is offered to meritorious students willing to
pursue their higher education in India or abroad. Central Bank of
India established in the year 1911 was regarded as the first
commercial bank of India entirely managed and owned by Indians.
Being the first Swadeshi Bank of India, it was nationalized in the
year 1969. In order to know more about Central Bank student loans,
scroll down the page.

Candidate's Eligibility
Candidates applying for the education loan need to satisfy
certain eligibility criteria as specified by the bank.

• Applicants should be Indian Nationals and aged between 16-40


years.

Students applying for the Central bank of India student loan are considered
eligible if they get admission to various professional or technical courses
through merit based selection process or entrance examination.

Objective
The scheme aims at providing financial assistance on reasonable
terms :

• To the poor and needy to undertake basic education.


• To the student/employed persons to pursue higher education

Eligibility

• Studies in India :
• School education including plus 2 stages.
• 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 course of reputed institutions accredited
to
• Department of Electronics or Institutions 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 Universities.
• Evening courses of approved institutions.
• Other courses leading to Diploma/Degree etc. conducted by
Colleges/Universities approved by UGC/Govt./AICTE/ICMR
etc.
• Courses offered by National Institutes and other reputed
private institutions. Any other institution courses depending
on future prospects/recognition by user institutions deemed
proper by the Bank.

For graduation

Cent Vidyarthi Loan. It is offered to meritorious students willing to


pursue their higher education in India or abroad. Central Bank of
India established in the year 1911 was regarded as the first
commercial bank of India entirely managed and owned by Indians.
Being the first Swadeshi Bank of India, it was nationalized in the
year 1969. In order to know more about Central Bank student loans

Studies in India
• School education which includes +2 standard, graduation, post
graduation and professional courses in the areas of
Agriculture, Law, Engineering, Veterinary Science, Medicine,
Management, Dental Science, Computer and others.
• The courses should be offered by reputed colleges or
institutions approved by Department of Electronics or
Institutions certified by the University.
• IIM, NIFT, XLRI, IIT offered courses, reputed regular diploma
and degree courses, evening courses and courses that are
conducted by foreign universities in India.

Studies Abroad

• Graduation, post graduation and courses conducted by


reputed institutions like CIMA-London and CPA-USA.

Expenses Covered by Central Bank Student Loans


The loan amount covers hostel charges, examination fees,
laboratory and library fee, building fund, caution deposit,
refundable deposit and other expenses. The education loan also
covers the travel expenses of the students traveling abroad for
education.

Quantum of Finance

The maximum amount of loan offered is Rs.7.50 lacs and Rs.15 lacs
for studies in India and abroad respectively.

Margin

There is no margin for education loans up to Rs.4 lacs. For loans


above Rs. 4 lacs the margin is 5% and 15% respectively for India and
abroad.
Security

Various types of securities are charged for the students willing to


take education loan of Central Bank of India.
Education loan up to Rs.4 lacs- co-obligation security.
Education loan more than Rs.4 lacs and up to Rs.7.50 lacs-
Collateral security
Education loan more than Rs.7.50 lacs-collateral security or
co-obligation of any of the following-parents, guardians and
third party.

FOR POST GRADUATION

Finance for Education

Purpose: Aims at bringing Education within the reach of students


and help them improve their prospects in life.

Courses Approved

For pursuing Graduate/Post-Graduate, Management/Job-oriented


courses, Professional Courses of recognised Universities / reputed
Institutes, Computer courses conducted by NIIT, APTECH, CMC, C-
DAC with duration of one year and more.

For pursuing Post-Graduate course in Science, Technology,


Medicine, Engineering, Management courses, Law, Accountancy
leading to Master's degree or Post-Graduate Diploma in recognised
University abroad.

Should have consistent good academic record


Eligibility: in previous examinations with marks over 60 %
in 10th.& 12th or first grade in other cases.
(For SC/ST Second class will be sufficient).
Upto Rs.7.50
Amount of Loan: India
lakh
Abroad Upto Rs.15 lakh
Margin: Up to Rs.4 lakh No Margin
Over Rs.4 lakh - In India 5%
Studies Abroad 15%
( Relaxation of loans upto Rs.50,000/-for
SC/ST )
Rate of interest: Upto Rs.4 lakh PLR
Above Rs.4 lakh PLR + 1%

Highlights of loan

Study Abroad Study India


Course Graduation Graduation

Loan type Term Loan Term Loan

Loan purpose Fee payable to Fee payable to College /


College/Hostel, Hostel, Examination /
Examination / Library / Library / Laboratory,
Laboratory, Purchase Purchase of books /
of books / equipments / equipments /
instruments, Caution instruments, Caution
deposit / building fund, deposit / building fund,
Purchase of computer, Purchase of computer
Travel expenses /
passage of money

Loan amount Min. - Rs 50000 Min. - Rs 50000


Max. - Rs 400000 Max. - Rs 400000

Interest rate 10.5 % 10.5 %

Comparison of loan rates of hsbc and


icici

Introduction of ICICI bank

ICICI Bank is India's second-largest bank with total assets of about


Rs.112,024 corer and a network of about 450 branches and offices and about
1750 ATMs. ICICI Bank offers a wide range of banking products and
financial services to corporate and retail customers through a variety of
delivery channels and through its specialized subsidiaries and affiliates in
the areas of investment banking, life and non-life insurance, venture capital,
asset management and information technology. ICICI Bank was originally
promoted in 1994 by ICICI Limited, an Indian financial institution, and was
its wholly-owned subsidiary.
ICICI bank education loan covers the course fee, other supplementary
expenses set by the institute. Student must have the letter from the
Institute which has the details confirming his admission and course fee
along the other important documents. ICICI bank requires a
confirmation letter from ICICI Prudential life stating that the students
will get absorbed under the payroll of the company.

HSBC Bank

HSBC bank helps you to fulfill your dream to get good admission in
good college/ professional institute in India or abroad. Bank gives
education loan for studies in India and abroad. Bank has flexible
tenure, comprehensive coverage, low interest rate, etc. Bank also have
special discount for HSBC customers.

1. Interest rates
The first and the foremost is the interest rates charged on
the education loan. This interest rate is the primary factor
that earns money for banks and so they want it to be
higher, but the competition in the loan market makes the
bank keep it to a level where the education loan seems
affordable to the customer, while it earns money for the
banks too. Whether the interest rate charged on your
education loan is fixed or floating is also a matter of
concern. Generally, the value of fixed interest rates is higher
than the floating interest rates. Going for floating interest
rates in this low interest regime is always a better option.
The interest rates also depend on the amount of education
loan one wants, keeping in mind all the realistic
requirements, a judicious comparison of various offers from
leading banks will certainly help the student find an
education loan that pinches the least.

2. How the interest is charged?


Though the banks defer repayments, but they start charging
the interest immediately after the disbursal of the loan. How
this interest is charged will determine the amount of interest
you will pay. Enquire carefully whether it is charged on a
daily reducing balance, or on a quarterly reducing balance.
The interest rates charged on loans thus keep accumulating
until you start the repayments. This can significantly
increase the repayment burden. If the bank providing
education loan gives an option to pay the interest portion of
your education loan immediately, use it by all means.

3. The waiver period


The third most important thing to watch out is the waiver
period. Banks providing education loans generally don't
expect the student to pay until he gains employment after
completion of the course. Check this out carefully, does your
education loan provider gives you such an option? The whole
idea is to get comfortable financially before the bank asks
you for a repayment.

4. Fees and other costs


The fees associated with the education loan such as
processing fees, administrative fees, documentation costs
etc. should be minimal.

5. Collateral, guarantee or security


There is a collateral clause with all the educational loans
from banks in India provided the education loan exceeds a
value of 4 lacs. This figure can vary from bank to bank but it
is generally a norm. Make sure to ask the bank
about collateral requirements and have it ready before the
disbursal of loan.

6. The down payment


A down payment also has to be made with every education
loan, ranging between 5%-20% of the loan amount
depending on banks this money has to be paid upfront.

COMPARE : EDUCATION
LOAN Rates

Study India

Bank Min. loan Max. loan Rate % Eligibility

-
Central Bank 50000.00 400000.00 10.50
of India

-
HSBC Bank 50000.00 2500000.00 12.00
-
ICICI Bank 50000.00 400000.00 13.75

Study Abroad
Bank Min. loan Max. loan Rate % Eligibiliy

-
Central bank 50000.00 400000.00 10.50
of India

50000.00 250000.00 12.00 -


HSBC Bank

-
ICICI Bank 50000.00 400000.00 13.00

Educational Loans to students of Indian


Institute of Management (IIMs) under
Cent Vidyarthi Scheme on concessional
terms.

Description As per Existing Concessions to


Scheme IIM students

Maximum loan amount Rs 10.00 lakh Rs 12.50 lakh

Eligible expenses- Fee payable to In addition to the eligible


addition college/ school/ expenses enlisted in the
hostel. existing scheme,
following types of
1. Examination / expenses have been
Library/ Laboratory included for financing;
fee.
2. Purchase of 1. Travel Expenses
books/ equipments 2. Mess Charges
/ instruments/ 3. Restriction of 10%
uniforms. of total tuition fees
3. Caution deposit, for caution/
Building fund building/
/refundable refundable
deposit supported deposits has been
by Institution removed.
bills/receipts, 4. Loan for Motorbike
subject to the 5. Living expenses
condition that the up to Rs. 36,000/-
amount does not p.a.
exceed 10% of the 6. 6. Visit to foreign
total tuition fees universities in
for the entire exchange
course. programme
4. Travel expenses/
passage money
for studies abroad.
5. Purchase of
computers -
essential for
completion of the
course.
6. Insurance
premium for
student borrower

Margin Up to Rs 4 lakh-Nil Nil


Above Rs 4 lakh-5%

Borrower Student is the principal Loan to be sanctioned in


borrower with Co- individual name of the
obligation of parents student.
/guardian/ parent- in-
law/spouse. Parent/ natural guardian
may also

be taken as co-
borrowers (Optional).

Up to Rs. 4 lakh- Nil Assignment of future


Security income of the
Above Rs. 4 lakh up to student.Comprehensive
Rs. 7.50 lakh-Third party Life Insurance Policy in
guarantee in addition to the name of the student
co-obligation of for at least the loan
parents /guardian/parent amount and minimum
period of 10 years
Above Rs. 7.50 lakh -Co- assigned in favour of
obligation of parents Bank.
/guardian/parent-in-
law/spouse together with
tangible collateral security
of suitable value and
assignment of future
income of the student.

Rate of Interest BPLR-2.50% i.e. 9.50 % BPLR-1.75 % i.e. 10.25


at present %. Existing special
concession of 50 basis
points will continue to be
available to Female, SC,
ST and Minority
Community students.

Other concessions BPLR-1.75 % i.e. 10.25


%. Existing special
concession of 50 basis
points will continue to be
available to Female, SC,
ST and Minority
Community students.

Others BPLR-1.75 % i.e. 10.25 All other terms and


%. Existing special conditions of Cent
concession of 50 basis Vidyarthi Scheme will
points will continue to be remain unchanged.
available to Female, SC,
ST

CENT Vidyarthi

Cent Vidyarthi Scheme

Studies in India

School education including plus 2 stages.


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 course of reputed institutions accredited to
Department of Electronics or Institutions 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 Universities.
Evening courses of approved institutions.
Other courses leading to Diploma/ Degree etc. conducted by
Colleges/Universities approved by UGC/ Govt./ AICTE/ ICMR etc.
Courses offered by National Institutes and other reputed private
institutions. Any other institution courses depending on future
prospects/recognition by user institutions deemed proper by the
Bank.
Studies abroad

Graduation : For job oriented professional/technical courses offered


by reputed Universities.
Post Graduation : MCA, MBA, MS. etc.
Courses conducted by Chartered Institute of Management
Accountants (CIMA) - London, Chartered Public Accountant (CPA) -
USA etc.
Loan Details

Coverage of expenses :

Fee payable to College/School/Hostel.


Examination/Library/Laboratory fee.
Purchase of books/equipments/instruments/uniforms .
Caution deposit/building fund/ refundable deposit.
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
tours, project work thesis etc.
To meet insurance premium for the policy on the life of the student.
Reimbursement of these expenses already incurred/loan taken from
identified sources (to meet the contingencies) by the applicant on
merits is allowed, subject to production of original receipts within one
month if applicant has secured admission in India and within six
weeks if the applicant is going abroad.

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

For studies in India : Max. Rs.7.50 lacs


For studies abroad : Max Rs.15.00 lacs

Margin :
Upto to Rs.4.00 lacs - No margin
Above Rs.4.00 lacs

for studies in India : 5%


studies abroad : 15%
Scholarship assistance 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 :

Upto Rs.4 Lakhs : No security .Only to take co-obligation of either or


both parents/guardian
Above Rs.4 Lakhs and upto Rs 7.50 Lakhs: Collateral in the form of
satisfacfactory third party guarantee
Above Rs.7.50 Lakhs: Collateral security of suitable value or co-
obligation of parents/ guardians/ third party along with the assignment
of future income of the student for payment of installments

Rate of Interest:
As per bank rules
Further details of cent vidayarthi scheme

Purpose of Loan
For pursuing higher studies, in India & Abroad

Eligibility
Student should be an Indian National having secured
admission to Professional / Technical courses through
entrance test / selection process.

Nature of Facility
Term Loan

Calculation of Eligible Loan Amount


For payment of Hostel fee caution deposit, refundable
deposit, admission, examination, library, laboratory, cost of
books, equipments, uniforms, computer (Hypothecated).
One-way air passage in case of studies abroad.
Reimbursement of admission fee books airfare etc., if
already incurred, within 1 month for studies
Maximum loan amount
Rs. 10 lacs for studies in India.
Rs. 20 lacs for studies Abroad.

Margin
Upto Rs. 4 lacs : NIL, Above Rs. 4 lacs:In India - 5%
,Abroad - 15% Margin (scholarship may be included in
margin.)

Incentive
1% interest concession, if interest is serviced during study
period when repayment holiday is specified for interest
repayment. It should be given at the end of Financial Year
i.e. 31st March.
Interest is calculated at simple basis during Repayment
Holiday / Moratorium Period. Interest will be compounded on
monthly rests from due date of first instalment.

Disbursement
Payment directly to college / hostel / mess / airlines etc. In
appropriate cases disbursement to be made to borrowers
subject to satisfactory evidence. Original receipts to be
submitted.

Repayement

Payement is made as directed by the bank


Security
Upto Rs.4 Lakhs: Co-obligation of parents/ guardian/
parent-in-law/spouse

Above Rs. 4 lakhs and up to Rs.7.50 lakhs:


Co-obligation of parents/ guardian/ parent-in–law/spouse
together with collateral security in the form of suitable third
party guarantee.

Above Rs.7.50 lakhs: Co-obligation of parents / guardian /


parent-in–law / spouse together with tangible collateral
security of suitable value, along with the assignment of
future income of the student for payment of installments.

Conclusions

Loans play a very important role now a days . central bank of India provides
loans to poor and needy so that they can take up basic education and to the
student /employees person to pursue higher education loan can be applied
for studies in India and abroad for graduation, post graduation , diploma
/degree courses central bank of India provides education loans at different
rates to students studying in India and abroad .there are also various other
loan which central bank of India offers but my focus is on educational loan
of central bank of India .basically loans are of two types secured loans and
unsecured loans . secured loans are those where market value of security is
not less than amount of such loans .unsecured loans are those where there is
no security .loans can also be short term and long term loans but education
loans are long term loans because it is said that loan will be repaid when
student will start earning. Normally a bank keeps several securities in case
the borrower is unable to repay the loan, the bank can take away these
securities . in order to the banker a charge should be created on securities .
creating a charge means the security or the think against which the bank has
taken loan can not be sold.

Recommendation
Loans should be given at reasonable rates to students so that even poor
people can afford it and give education to their children. Government should
take more initiative so that every child in India is educated. The fast easy
student loan has thus increased the probability of more and more
students undertaking higher education. The Ministries of Education
also maintain a strict check on the approval process of these loans
which makes student loans easy to get.
BIBLIOGRAPHY
 www.google.com

 www.yahoo.com

 www.centralbank.net.in