A Summer Internship Project Report

On

Study of Credit Appraisal Process on Education Loan

At
Kotak Mahindra Bank Ltd.(928, Mantri Centre FC road),Pune

By
PRIYANKA DINESH GANDHI
MBA (Finance)
Batch 2022-24
UNDER GUIDENCE OF
DR. VIKAS BARBATE

Submitted to

In partial fulfillment of the requirement for the award of

Degree of Master in Business Administration (MBA)

Submitted Through

Audyogikshikshan Mandal School Of Business Management,

Pimpri, Pune-411009
 DECLARATION

I am Priyanak Dinesh Gandhi a student of Audyogikshikshan Mandal School Of

Management, Pimpri, Pune-411009, hereby declare that the project report entitled.
Study Of Credit Appraisal Process on Education Loan. Written and submitted by me
to the Savitribai Phule Pune University, in partial fulfilment of the requirments by me to
the degree of Masters in Business Administration. Under the gudience of DR.VIKAS
BARBATE. It is my original work and the conclusions drawn therein are based on
material collected by myself.

Date-
Place-

Priyanka Dinesh Gandhi.

 Acknowledgements

I have successfully completed my internship with great degree of satisfaction, to

both me and my industry guide. It had taken my immense efforts as well as
understanding and support both from my college guide and my industry guide.
So I would first like to thanks Director Dr. Sudhkar Bokephode
and the entire faculty for their continuous support, belief and guidance.

This project would have been impossible without the support of Prof. Vikas Barbate at
the Audyogikshikshan Mandal School of Management. It is an uncommon privilege to
be afforded the time, opportunity and finances to pursue this internship in my dream
organization.

At Kotak mahindra bank (928, Mantri Centre FC road), I would like to thank Mr.
Avinash Gole (Team Lead), for the wonderful opportunity to work with
this esteemed organization.

Without their outstanding support and guidance, I wouldn’t have had the
experience and knowledge I now have about the banking industry.
 Table of Contents

Sr.No. Particulars Page No.

1. Executive Summary

2. Intoduction

3. Objectives
Scope & Limitions

4. Industry Profile
Introduction

5. Company Profile
Company History
Vision, Mission
Rating
Global Presence
Service/Product Profile

6. Literature Review

7. Research Methodolody
Research Design

8. Data Analysis

9. Findings of the Research

10. Suggestions

11. Conclusions

Bibliography
 Chapter 1

Executive Summary
 Chapter 1: Executive Summary

Banking system of India has through three phases of development

Nationalization, Privatiosation and lastly banking sector reform. Kotak mahindra

bank has started its journey from 1935 and served as a major public sector bank

in India. As a part of my post-graduation program, have completed my

internship in this organization. Throughout the period of my internship, I had

been working in serval departments. However, I was officially appointed to work

in the credit department, the report will reveal the background of the company,

description of the loans, findings and recommendation based on the experience

gathered.

One of my major responsibilities was assist the clients in opening new accounts.

Alongside, my work was limited to account opening section, bills and clearing

section.

The report is based on my critical observation while working in the credit division

of Kotak mahindra bank . Lending is one of the principle function of the bank.

Sound lending practice therefore, is very important for profitability and success of

a bank. For the sake of sound lending, it is necessary to develop a sound policy

and modern credit management technique to ensure that loans are safe and the

money will come back within the time set for repayment. For this proper and

proper and prior analysis of credit appraisal process is required to assess the risk.

The comparative analysis shows that KOTAK MAHINDRA BANK is in better

position, but there are some obstacles it faces to sustain position. However, the

continuous improvement of the services will certainly place the bank in the best

position in one decade.

 Chapter 2

Introduction
 Chapter 2: Introduction

In this report there is detail study of Credit Appraisal Process of Education Loan.
Credit Appraisal means an investigation/assessment done by the banks before
providing any Loans & advances/project finance & also checks the commercial,
financial & technical viability of the project proposed, its funding pattern & further
checks the primary & collateral security cover available for recovery of such
funds.

Credit Appraisal is a process to ascertain the risks associated with the extension
of the credit facility. It is generally carried by the financial institutions, which are
involved in providing financial funding to its customers. Credit risk is a risk related
to non-repayment of the credit obtained by the customer of a bank. Thus it is
necessary to appraise the credibility of the customer in order to mitigate the
credit risk. Proper evaluation of the customer is performed this measures the
financial condition and the ability of the customer to repay back the Loan in
future. Generally, the credits facilities are extended against the security know as
collateral. But even though the Loans are backed by the collateral, banks are
normally interested in the actual Loan amount to be repaid along with the interest.
Thus, the customer's cash flows are ascertained to ensure the timely payment of
principal and the interest.

It is the process of appraising the credit worthiness of a Loan applicant. Factors

like age, income, number of dependents, nature of employment, continuity of
employment, repayment capacity, previous Loans, credit cards, etc. are taken
into account while appraising the credit worthiness of a person. Every bank or
lending institution has its own panel of officials for this purpose.
 Chapter 3:

Industry Profile
 Chapter 3: Industry Profile

BankingIndustry
A Bank is an institution which accepts deposits from the general public and
extends loans to the households, the firms and the government. Banks are those
institutions which operate in money. Thus, they are money traders, with the
process of development functions of banks are also increasing and diversifying
now, the banks are not nearly the traders of money, they also create credit. Their
activities are increasing and diversifying. Hence it is very difficult to give a
universally acceptable definition of bank. "Banking business" means the business
of receiving money on current or deposit account, paying and collecting cheques
drawn by or paid in by customers, the making of advances to customers.

Definition
i) According to Sec.5(b) of the Banking Regulation Act, 1949, the term
“Banking means accepting for the purpose of lending or investment of deposits
of money received from the public repayable on demand or otherwise and
withdrawal by cheque, draft and order or otherwise”.

ii) According to the Banking Regulation Act, 1949, a “Banker” is the one who is
engaged in the business of accepting deposits from the public and utilizing such
deposits either for the purpose of lending or for the purpose of Investment

iii) According to David Ricardo, “Bank” is a dealer or transaction of money.

They are the financial intermediaries collecting “deposits” and lending.

Indian Banking System

Banking in India, in the modern sense, Originated in the last decades of the 18th
century. Among the first banks were the Bank of Hindustan, which was
established in 1770 and liquidated in 1829–32; and the General Bank of India,
established in 1786 but failed in 1791.
The largest bank, and the oldest still in existence, is the State Bank of India (S.B.I).
It originated as the Bank of Calcutta in June 1806. In 1809, it was renamed as the
Bank of Bengal. This was one of the three banks founded by a presidency
Government; the other two were the Bank of Kotak mahindra bank bay in 1840 and the
Bank of Madras in 1843. The three banks were merged in 1921 to form the Imperial
Bank of India, which upon India's independence, became the State Bank of India in
1955. For many years the presidency banks had acted as quasi-central banks, as
did their successors, until the Reserve Bank of India was established in 1935,
under the Reserve Bank of India Act, 1934.
In 1960, the State Banks of India was given control of eight state-associated
banks under the State Bank of India (Subsidiary Banks) Act, 1959. These are now
called its associate banks. In 1969 the Indian government nationalized 14 major
private banks, one of the big bank was Bank of India. In 1980, 6 more private
banks were nationalized. These nationalized banks are the majority of lenders in
the Indian economy. They dominate the banking sector because of their large
size and widespread networks.
The Indian banking sector is broadly classified into scheduled and
non-scheduled banks. The scheduled banks are those included under the 2nd
Schedule of the Reserve Bank of India Act, 1934. The scheduled banks are
further classified into: nationalized banks; State Bank of India and its associates;
Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks. The
term commercial banks refer to both scheduled and non-scheduled commercial banks
regulated under the Banking Regulation Act, 1949.
Generally banking in India is fairly mature in terms of supply, product range and
reach-even though reach in rural India and to the poor still remains a challenge.
The government has developed initiatives to address this through the State Bank
of India expanding its branch network and through the National Bank for
Agriculture and Rural Development (NABARD) with facilities like microfinance.
Reserve Bank of India (RBI):
The country had no central bank prior to the establishment of the RBI. The RBI is
the supreme monetary and banking authority in the country and controls the
banking system in India. It is called the Reserve Bank’ as it keeps the reserves
of all commercial banks.

Commercial Banks:
Commercial banks mobilize savings of general public and make them available
to large and small industrial and trading units mainly for working capital
requirements.
Commercial banks in India are largely Indian-public sector and private sector
with a few foreign banks. The public sector banks account for more than 92
percent of the entire banking business in India—occupying a dominant position in
the commercial banking. The State Bank of India and its 7 associate banks along
with another 19 banks are the public sector banks.

Regional Rural Banks:

The Regional Rural Banks (RRBs) the newest form of banks, came into existence
in the middle of 1970s (sponsored by individual nationalized commercial banks)
with the objective of developing rural economy by providing credit and deposit
facilities for agriculture and other productive activities of al kinds in rural areas.
The emphasis is on providing such facilities to small and marginal farmers,
agricultural laborers, rural artisans and other small entrepreneurs in rural areas.
Other special features of these banks are:
(i) their area of operation is limited to a specified region, comprising one or more
districts in any state;
(ii) their lending rates cannot be higher than the prevailing lending rates of
cooperative credit societies in any particular state;
(iii) the paid-up capital of each rural bank is Rs. 25 lakh, 50 percent of which has been
contributed by the Central Government, 15 percent by State Government and 35
percent by sponsoring public sector commercial banks which are also
responsible for actual setting up of the RRBs.
These banks are helped by higher-level agencies: the sponsoring banks lend
them funds and advise and train their senior staff, the NABARD (National Bank
for Agriculture and Rural Development) gives them short-term and medium, term
loans: the RBI has kept CRR (Cash Reserve Requirements) of them at 3% and
SLR (Statutory Liquidity Requirement) at 25% of their total net liabilities, whereas
for other commercial banks the required minimum ratios have been varied over time.
Scheduled and Non-Scheduled Banks:
The scheduled banks are those which are enshrined in the second schedule of the RBI
Act, 1934. These banks have a paid-up capital and reserves of an aggregate value
of not less than Rs. 5ooooo have to satisfy the RBI that their affairs are carried out in
the interest of their depositors.
All commercial banks (Indian and foreign), regional rural banks, and state
cooperative banks are scheduled banks. Non- scheduled banks are those which
are not included in the second schedule of the RBI Act, 1934. At present these
are only three such banks in the country.

Cooperative Banks:
Cooperative banks are so-called because they are organized under the
provisions of the Cooperative Credit Societies Act of the states. The major
beneficiary of the Cooperative Banking is the agricultural sector in particular and
the rural sector in general.
The cooperative credit institutions operating in the country are mainly of two
kinds: agricultural (dominant) and non-agricultural. There are two separate
cooperative agencies for the provision of agricultural credit: one for short and medium-
term credit, and the other for long-term credit. The former has three tier and federal
structure.
At the apex is the State Co-operative Bank (SCB) (cooperation being a state
subject in India), at the intermediate (district) level are the Central Cooperative
Banks (CCBs) and at the village level are Primary Agricultural Credit Societies
(PACs).
Long-term agriculture credit is provided by the Land Development Banks. The
funds of the RBI meant for the agriculture sector actually pass through SCBs and CCBs.
Originally based in rural sector, the cooperative credit movement has now spread to
urban areas also and there are many urban cooperative banks coming under SCBs.

History
Globally, the story of banking has much in common, as it evolved with the
moneylenders accepting deposits and issuing receipts in their place. Banking
was fairly varied and catered to the credit needs of the trade, commerce,
agriculture as well as individuals in the economy.
The pre- independence period was largely characterized by the existence of private
bank organized as joint stock companies. Most banks were small and had private
private shareholding of the closely held variety. They were largely localized and many of
them failed.
The period beginning from 1967 to 1991 was characterized major development,
viz.., social control on banks in 1967 and nationalization of 14 banks in 1969 and 6
more in 1980.
The period beginning from the early 1990s witnessed the transformation of the
banking sector as a result of financial sector reforms that were introduced as a
part of structural reforms initiated in 1991.
We can summaries the origin of banking in India in the following ways
Early phase of Indian Banks, from 1786 to 1969
The first bank in India, the General Bank of India, was set-up in 1786. Bank of
Hindustan and Bengal Bank followed.
The East India Company established Bank of Bengal (1809), Bank of Kotak mahindra
bay(1985) and Bank of Madras (1843) as independent units and called them
Presidency banks. These three banks were amalgamated in 1920 and the
Imperial Bank of India, a bank of private shareholders, mostly Europeans, was
established.
Allahabad Banks was established, exclusively by Indians, in 1865.
Punjab National Bank was set-up in 1894 with headquarters in Lahore.
Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda,
Canara Bank, Indian Bank and Bank of Mysore was set-up.
The Reserve Bank of India came in 1935.
To streamline the functioning and activities of commercial banks, the
Government of India came up with the Banking Companies Act, 1949, which was
changed to the Banking Regulation Act, 1949.
Banking sector Reforms from 1969 to 1991
In 1955, government nationalized the Imperial Bank of India and started offering
extensive banking facilities, especially in rural and semi-urban areas.
The government constituted the State Bank of India to act the principal agent of
the RBI and to handle banking transaction of the Union Government and State
Government all over the country.
7 banks owned by the Princely state were nationalized in 1959 and they become
subsidiaries of the 1959 and they became subsidiaries of the State Bank of India.
In 1969, 14 Commercial bank in the country were nationalized.
In the phase of banking sector reforms, 7 more banks were nationalized in 1980.
With this, 80% of the banking sector in India came under the government
ownership.
 New phase of Indian Banking System, Reforms after 1991
This phase has introduced many more products and facilities in the banking
sector as part of the reforms process.
In 1991, under the chairmanship of M Narasimham, a committee was set-up,
which worked for the liberalization of banking practices.
In the phase, the country is flood with foreign bank and their ATM station
Efforts are being put to give a satisfactory service to customers.
Phone banking and net banking are introduced. The entire system became more
convenience and swift. Time is given importance in all money transactions.

Nationalization of Banks
The nationalization of commercial banks took place with an aim to achieve
Social Welfare, Controlling Private Monopolies, Expansion of Banking, Reducing
Regional Imbalance, Priority Sector Lending and Developing Banking Habits.
In order to have more control over banks, in 19th July, 1969 Mrs. Indira Gandhi
the then Prime Minister nationalized 14 large commercial banks whose reserve
were more than Rs 50 crore. The main aim of nationalizing was to reach client in
rural area and provide them which more quality services.
Following is the list of bank, which got nationalized at this time
Allahabad Bank
Bank of Baroda
Bank of India
Kotak mahindra bank
Central Bank of India
Canara Bank
Dena Bank
Indian Bank
Indian Overseas Bank
Punjab National Bank
Syndicate Bank
UCO Bank
Union Bank
United Bank of India
In 15 April, 1980 the banks with more than Rs 200 crore of reserves got
nationalized.
Those six banks, which got nationalized, are the following
Andhra Bank
Corporation Bank
New Bank of India
Oriental Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
Later on, in year 1993, the government merged New Bank of India which Punjab
National Banks. It was the only merge between nationalized banks.
 Chapter 4:

Company Profile
 Chapter 4: Company Profile

Kotak Mahindra bank

Kotak Mahindra Bank Limited is an Indian banking and financial services company
headquartered in Mumbai. It offers banking products and financial services for corporate
and retail customers in the areas of personal finance, investment banking, life insurance,
and wealth management. It is India’s third largest private sector bank by market
capitalisation after HDFC Bank and ICICI Bank. As of 31 march 2023, the bank has a
national footprint of 1,780 branches and 2,963 ATMs.

1985–2002: Kotak Mahindra Finance

In 1985, Uday Kotak founded Kotak Capital Management Finance as an investment and
financial services company with a loan of ₹30 lakh from family and friends. In 1986, Anand
Mahindra and his father Harish Mahindra invested ₹1 lakh in the company which was
subsequently renamed Kotak Mahindra Finance. The company was initially engaged in bill
discounting, along with lease and hire purchase activities.
In the early 1990s, the company started offering car financing and investment
banking services and expanded its operations overseas. In 1996, car financing company Kotak
Mahindra Primus was incorporated as a 60:40 joint venture between Kotak Mahindra Finance
and Ford Credit International. In the same year, Kotak Mahindra Finance hived off its
investment banking division into a new company, Kotak Mahindra Capital, started in
partnership with Goldman Sachs.

In 1998, Kotak Mahindra Finance started its mutual fund arm called Kotak Mahindra AMC. In
2001, OM Kotak Mahindra Life Insurance was established as a 74:26 joint venture between
Kotak Mahindra Finance and Old Mutual.

2003–present: Kotak Mahindra Bank

In February 2003, Kotak Mahindra Finance received a banking licence from the Reserve Bank
of India, becoming India's first non-banking finance company to be converted into a bank.
Kotak Mahindra Finance was then renamed Kotak Mahindra Bank. At the time, Uday Kotak had
a 56% stake in the company while Anand Mahindra held a 5% stake.

In 2005, Kotak Mahindra Bank acquired Ford Credit's 40% stake in Kotak Mahindra Primus,
making it a wholly-owned subsidiary of the group. Kotak Mahindra Primus was subsequently
renamed as Kotak Mahindra Prime. In 2006, Kotak Mahindra Bank bought out Goldman Sachs'
25% stake in Kotak Mahindra Capital for ₹210 crore (US$46.35 million) and 25% in Kotak
Securities for ₹123 crore (US$27.15 million), turning both companies into its wholly-owned
subsidiaries.

In 2014, Kotak Mahindra Bank acquired a 15% stake in Multi Commodity Exchange (MCX)
from Financial Technologies Group for ₹459 crore (US$75.21 million) to become the
company's largest shareholder.

In 2014, Kotak Mahindra Bank announced the acquisition of ING Vysya Bank in a deal valued
at ₹15,000 crore (US$2.34 billion). With the merger completed in 2015, Kotak Mahindra Bank
had almost 40,000 employees, and the number of branches reached 1,261.[21] After the
merger, ING Group, which controlled ING Vysya Bank, obtained a 6.5% stake in Kotak
Mahindra Bank.

In 2015, Kotak Mahindra General Insurance, a wholly-owned subsidiary of Kotak Mahindra

Bank, started operations after receiving IRDAI's approval. In 2016, Bharti Airtel and Kotak
Mahindra Bank started a 80:20 joint venture called Airtel Payments Bank.

In 2016, Kotak Mahindra Bank acquired BSS Microfinance for ₹139.2 crore (US$20.72 million).

In March 2017, Kotak Mahindra Bank launched an online savings account called Kotak 811,
named after the date Prime Minister Narendra Modi had announced demonetisation in the
previous year, which according to Uday Kotak was "the day that changed India. Kotak 811
helped the bank double its number of customers by September 2018.

In April 2017, Kotak Mahindra Bank acquired Old Mutual's 26% stake in Kotak Mahindra Old
Mutual Life Insurance for ₹1,292 crore (US$198.4 million), making the life insurance company
its wholly-owned subsidiary.

In 2021, Kotak Mahindra Bank sold its 8.57% stake in Airtel Payments Bank to Bharti
Enterprises for ₹295 crore (US$39.81 million). In the same year, Kotak Mahindra Group
acquired the vehicle financing portfolio of Volkswagen Finance India and passenger vehicle
financing portfolio of Ford Credit India. In 2022, it acquired the agriculture and healthcare
equipment financing portfolio of DLL India.

In 2023, Kotak Mahindra Bank acquired microfinancier Sonata Finance for ₹537
crore (US$67 million).

In 2014, Kotak Mahindra Bank announced the acquisition of ING Vysya Bank in a deal valued
at ₹15,000 crore (US$2.34 billion). With the merger completed in 2015, Kotak Mahindra Bank
had almost 40,000 employees, and the number of branches reached 1,261.[21] After the
merger, ING Group, which controlled ING Vysya Bank, obtained a 6.5% stake in Kotak
Mahindra Bank.

In 2015, Kotak Mahindra General Insurance, a wholly-owned subsidiary of Kotak Mahindra

Bank, started operations after receiving IRDAI's approval. In 2016, Bharti Airtel and Kotak
Mahindra Bank started a 80:20 joint venture called Airtel Payments Bank.

In 2016, Kotak Mahindra Bank acquired BSS Microfinance for ₹139.2 crore (US$20.72 million).

In March 2017, Kotak Mahindra Bank launched an online savings account called Kotak 811,
named after the date Prime Minister Narendra Modi had announced demonetisation in the
previous year, which according to Uday Kotak was "the day that changed India. Kotak 811
helped the bank double its number of customers by September 2018.

In April 2017, Kotak Mahindra Bank acquired Old Mutual's 26% stake in Kotak Mahindra Old
Mutual Life Insurance for ₹1,292 crore (US$198.4 million), making the life insurance company
its wholly-owned subsidiary.

In 2021, Kotak Mahindra Bank sold its 8.57% stake in Airtel Payments Bank to Bharti
Enterprises for ₹295 crore (US$39.81 million). In the same year, Kotak Mahindra Group
acquired the vehicle financing portfolio of Volkswagen Finance India and passenger vehicle
financing portfolio of Ford Credit India. In 2022, it acquired the agriculture and healthcare
equipment financing portfolio of DLL India.

In 2023, Kotak Mahindra Bank acquired microfinancier Sonata Finance for ₹537
crore (US$67 million).
Chapter 5

Objectives
 Chapter 3: Objective

RESEARCH OBJECTIVES:

1. To know about the documentation required for credit appraisal.

2. To understand about the entire credit policy/process.

3. Current credit appraisal system used by Kotak mahindra bank .

4. Different credit facilities provided by Kotak mahindra bank .

 Chapter 6:

Literature Review
 Chapter 6: Literature Review

Literature review provides available research with respect to the selected topic of the
project the research findings by an author which has been done with respect to the
research topic. This chapter provides the overall view of the available literature with
respect to the topic of the project. The review of the related research works is
described as under: -

A study on the Higher education loan in India

This research paper published by R. Lavanya and Dr. S. Ramachandran
which is issued by Indian Journal of Applied Research ISSN-2249-555X
Vol. 04 Issue 02 dated on February 2014. Form this research paper it is
clear that issues faced by the bankers when they are retrieval of loan from
the students and what are the problems faced by them when they
approach the students in getting back the principle amount.

Author: R. Lavanya (Research Scholar, Bharath University, Chennai)

Dr. S. Ramachandran (Director, Management Department, Bharath University,

Issued: Indian Journal of Applied Research ISSN-2249-555X Vol. 04 Issue 02

Date: February 2014 Current Scenario in Education Loans in India
This research paper published Minu John which is issued by
IRA-International Journal of Management and Social Sciences ISSN
2455-2267 Vol. 03 Issue 01 dated on 01 April 2016. In this research paper
various aspects are taken into consideration like importance of
educational loans, Benefits of educational loans, Issues in getting students
loans, Problems faced by beneficiaries while taking education loans.
Challenges of banks, Repayments and recovery of education loans. Rise
of NPA as a result of non-payment of education loans through a detailed
literature survey. Significance of study is also mentioned in this.

Author: Minu John

Issued: IRA-International Journal of Management and Social Science ISSN
2455-2267 Vol. 03 Issue 01
Date: 01 April 2016
Financing Higher Education Loans in India, Trends and Troubles
This research paper published by P. Geetha Rani issued by Journal of
social sciences 2016, 12(4): 182.200 dated on 2 December 2016. The
paper attempts to investigate the trends in financing higher education
which convey that students loan is the dominating source of financing
higher education in India. This
 Chapter 7

Research Methodology
 Chapter 7: Research Methodology

STATEMENT OF PROBLEM
To find out the perception of the people towards Education Loan for higher
education.
Justification of Problem:
Being a 26-year-old established company in the oil and gas industry, Ajanta
Soya Limited had a history of quality customers for manufacturing best quality of
products. In the recent times however there has been a depreciation seen in the
overall sales and market position of the company as compared to its competitors.
Company has a lot to improve in various areas in order to overcome its
weaknesses and gain useful opportunities in order to outstand in the market
among its competitors. It needs to perform beyond its customer expectations.

Research Design
The education loan is to provide financial assistance/ support to meritorious

students for pursuing higher studies/ education in India and abroad. The main

emphasis is that a meritorious student, through poor, is provided with an

opportunity to pursue education with financial support from banking system.

Tool used Financial Analysis-

Primary Data:
* Observation, Discussion with the director
* The company profile. One-year studies have been obtained from KOTAK MAHINDRA
bank

Secondary Data:
* Old costumer’s proposals
* Reference books
* Web sites
* Bank Diaries
1. To know about the documentation required for credit appraisal.
2. KYC documents of Student, Applicant, Co Applicant and Guarantor.
i) Photo ID (PAN Card/ Passport/ Driving License/Voter ID/AadharCard)
ii) Address Proof (Passport/ Driving License/Voter ID/Aadhar Card/
Ration Card/ Light Bill)

Income Documents of Parents/ Co-Applicant

i) For Salaried Person:
Last 2 Years ITR (if Taxable Income) and Form 16

Latest 3 months’ salary slips

Last 6 months’ salary account statements.
ii) For Businessman/ Self-employed:
Last 2 year ITR.
Last 2 year Audited balance sheets and Profit loss statements
along with computation of income.
Last 12 month’s business bank account statements.
Tax Paid challan/26AS.
Business Proof-Proprietor-shop Act/ Grampanchyat Certif
iii) For Agriculturist:
Those who do not file income Tax return, income certificate issued
by Tahasildar, 8A and all 7/12 extract along with supporting income proofs.

Other documents related to academics.

10th std. mark sheet.
12th std. mark sheet
Diploma/ Degree mark sheets of all semesters.
Requisite exam scorecard/proof of obtaining seat in merit
based selection process (DTE/JEE scorecard studies in India,
GRE/TOEFL score card studying abroad or equivalent
requisite exam score card.
Confirmation letter from institute with fee structure or I-20
(studying abroad)
Receipts of fees paid already
Quotation of the laptop (fee structure of college to specifically
mention the requirement for the course)
If student has taken gap during academic year affidavit for gap.
 Declaration of source of margin money if applicable
Declaration of job opportunities, expected salary after getting job.
Declaration for option of repayment of interest during
moratorium period.
If plot/house/flat is offered as security – Latest search &
valuation report and all property related documents as per
housing loan checklist.
If takeover loan from other bank/institution, sanction letter
with statement of account.

2. To understand about the entire credit policy/process

1 Collect KYC Documents
2

2 Collect Passbook

LoanApplicationFormGiven

4 IfSalaried, UndertakingRequired fromCompany

5 KYC of1 Gaurantor, Preferably fromSame Company, isCollected

BranchLevelProcessing

7 RatingSheetisPreparedandAssessed

RateofInterestand RepaymentTermsare Decided

BranchRecommendation

10 LoanSanctioned

1. Collect KYC documents:

The first and foremost step in the credit appraisal process consists of collecting
the basic information about the customer i.e. to know your customer. Thus,
Xerox of KYC documents of customer are collected. The KYC document includes:
Passport size photograph,
Aadhar card & PAN card.
 2. Collect Passbook:
The passbook of the applicant is collected to verify whether the applicant is a
salaried person or not.

3. Loan application form given:

After assessing the documents of the applicant, the loan application form is given.
The form includes information as follows:
CBD23(Asset Liability form): It contains information about the insurance,
shares, gold, vehicle, etc. of the applicant.
Family details: No. of members, their age, occupation, etc.
Net worth of the applicant is derived on the basis of the provided information.

4. Undertaking from the company:

If the applicant is salaried, an undertaking from the company in which he/she is
working is required. This undertaking acts as a proof that the applicant is salaried.

5. Guarantor:
KYC documents of 1 guarantor are taken to guarantee the repayment of loan.
The guarantor should be preferably from the same company as of applicant.

6. Branch level processing:

Processing of the individual’s details is done using CAPS programme. Sgned
security documents of bank are collected. Profile of the applicant is prepared.
A cibil report containing information about previous loans taken (if any) is
prepared. Even if the applicant has just enquired about any loan that information
is also shown in the cibil report. Then a proposal is prepared.

What is Credit Score?

In order to compute the creditworthiness of a borrower, a credit analysis needs
to be performed. Apart from checking the credit history of a borrower, a lender
will also evaluate his or her credit score. A credit score refers to a particular score
that is given to a borrower depending on his or her credit history. This score is
provided by credit bureaus who will evaluate one’s full repayment behavior and
give them a score. It will be based on credit reports created by credit bureaus.
Hence, if one is interested in applying for a personal loan, a car loan or any other
loan, he or she should make sure that their credit score is good. In India, the
credit score of any loan applicant should ideally be 750 and above.
In India, CIBIL is the leading credit bureau that takes care of observing your credit
behavior and preparing a credit report with details of your credit score. You can
 check your CIBIL report to get an idea of your credit history.
In case your credit score is high, you can be positive that your loan application
will be approved, provided you meet other eligibility criteria set by your lender. If
your credit score is low, you can take specific measures in order to increase it.
When you incorporate good measures to enhance your credit score, you widen
your scope to get your loan approved by the bank. You will have to be extremely
financially disciplined to increase your credit score.

7. Branch Recommendations:
If the conclusion of rating sheet is satisfactory and the applicant duly submits the
required document, the branch has to give its recommendations as to why they
are accepting the loan proposal of the applicant.

8. Loan Sanctioned:
Finally, the loan is sanctioned to the applicant after he completes all the process
in the prescribed way.

3. Current credit appraisal system used by Kotak mahindra bank .

1) Student Eligibility.
Should be an Indian National.
Should have secured admission to higher education course in recognized institution
in India or Abroad through Entrance Test/ Merit Based selection process after
completion of HSC (10+2 or equivalent). However, Entrance test or selection purely
based on marks obtained in qualifying examination may not be the sole criterion for
admission to some of the post graduate courses or research programmers. In such
cases, branches may adopt
appropriate criteria based on employability and reputation of the institution
concerned.
CIBIL verification of the applicant, co-applicant and guarantor should be done.
Note: It would be in order to consider a meritorious student (who qualifies
for a seat under merit quote) eligible for loan under this scheme even if the
students choose to pursue a course under management quote.

2) Courses Eligible:
Studies in India:
Approved courses leading to graduate/ post graduate degree and PG
diplomas conducted by recognized colleges/ university recognized by
UGC/ Govt./ AICTE/ AIBMS/ ICMR etc.
Course like ICWA, CA, CFA etc.
Courses conducted by IIMs, IITs, IISC, XLRI, NIFT, NID etc.
Regular degree/ diploma courses like aeronautical, pilot training, shipping,
degree/ diploma in nursing or any other dripline approved by director
general of civil aviation/ shipping/ Indian Nursing or any other regulatory
body as the case may be, if the course is pursued in India.
Approved course offered in India by reputed foreign university.
Note: -
The above list is indicative in nature. Branches may approve other job
oriented courses leading to technical/ professional degrees, post graduate
degrees/ diplomas offered by recognized institutions under this scheme.
For studies in India following websites may be followed to verify important
details such as accreditation, affiliations, Address of the institutions,
approved courses etc. And copy should be kept on record for future reference.
Reference website: www.ugc.ac.in, www.education.nic.in, www.aicte.org.in.
Studies abroad

Graduation- For job oriented professional/ technical course offered by

reputed universities.

Post-graduation-MCA/MBA/MS etc.

Course conducted by CIMA/AFFA- London, CPA/ CFA in USA etc.

Degree/ diploma courses like aeronautical, pilot training, shipping etc.

provided these are recognized by competent regulatory bodies, in

India/ Abroad for the purpose of employment in India/ Abroad.

Please note that vocational training and skill development study

course will not be covered under the model Educational loan scheme,

as it is framed to provide loan for higher studies only.

For studies abroad following website may be followed to verify

important details such as accreditation, affiliations, address of the

 institutions, approved courses etc. and copy should be kept in
record for future reference.

2. Expenses considered for loan

i) Fees payable to college school/ hostel.
ii) Examination/ Library/ Laboratory fees.
iii) Travel expenses/ passage money for studies abroad.
iv)Insurance premium for student borrower, if applicable.
v) Caution deposit, building fund/ refundable deposited supported by
institution bill/ receipts.
vi) Purchase of books/ equipment/ instruments/ uniforms.
vii) Purchase of computer at reasonable cost, if required for completion of
course.
viii) Any other expenses required for complete the course like study tour,
project work, thesis etc.

3. Quantum of Finance
Need based finance to meet expenses worked out as per point No.2 will be
considered taking into account margin as per point no. 4, subject ton
following Ceilings:
Studies in India- Maximum Rs. 10.00 lakhs
Studies in Abroad-Maximum Rs. 20.00 lakhs
Note:
It would, however be open to branches to consider higher quantum of loan on
course to course basis (e.g. courses in IIMs, ISB etc.) keeping the requisite
margin (minimum 5% for studies in India and minimum 15% for studies
abroad) and collateral security (Equal to the quantum of the finance after
providing requisite margin for the proposed security as per the norms.)
Priority classification: Loans to individuals for educational purposes including
vocational courses up to Rs. 10 lakhs irrespective of the sanctioned amount
will be considered as eligible for priority sector.
It may also be noted that all eligible education loans irrespective of loan
quantum (i.e. even loan beyond Rs. 10 lakhs) qualify for interest subsidy under
central sector interest subsidy, scheme, subject to maximum subsidy
available only on loan amount of Rs. 10 lakhs.
As the loan amount above Rs. 7.50 lakhs is to be collaterally secured by
tangible collateral security of suitable valve acceptable to bank, along with
 assignment of future income of the students for payments of installments.

4. Margin:
a) For loan up to Rs. 4.00 lakhs- Nill
b) For loans above Rs. 4.00 lakhs
Studies in India-5%
Studies in Abroad-15%
Scholarship/ assistantship would be included in the margin. Margin will be
allowed to be brought in on year-to-year basis as and when disbursement
is made on a pro-rata basis.

5. Rate of Interest:
For loans up to Rs. 7.50 lakhs
Above Rs. 7.50 lakhs
The interest should be debited monthly on simple basis during the
repayment holiday/ moratorium period.
For the overdue amount, penal interest @ 2% be charged for loan
quantum above Rs. 4.00 lakhs for overdue period.
Interest concession: 1% interest concession be provided to the loan if the
interest is serviced regularly as and when applied during the study period
when repayment holiday specified for interest/ repayment under the
scheme. In other word, the option of servicing the interest, on its application is
with the borrower. The concession is available for the moratorium period only.

Interest rate concessions:

Our bank is offering concessions in rate of interest to student borrowers on
Education loan as under: -
Mahasarswati deposit A/c holder: 0.25% concession for students who
have maintained mahasaraswati recurring deposit account for 3 years with bank.
Girls students- 0.50% concession to girl students.
Housing Loan Borrowers: 0.50% concession for wards of Housing loan
borrowers, who have successfully completed a satisfactory repayment
period of 3 years or customers who have availed housing loan from our
bank in past and repaid entire loan in scheme, concession of 0.50%
offered for ward of housing loan borrowers is discounted.
Risk based pricing-Bank also extends concession to meritorious students
based on their previous academic performance and reward them by
providing concessional rate of interest on education loan availed. The
 concession in ROI based on risk rating are as under:
% of marks obtained at Rating Concession in applicable
all level ROI

90 and Above AAA 0.50%

80-89 AA 0.25%

75-79 A 0.15%

60-74 B NIL

Below 60 C NIL

6. Repayment holiday/Moratorium Period:

Repayment holiday/ Moratorium – courses period + 1 year (Uniform 1-year
moratorium for repayment after completion of studies in all cases).
The accrued interest during the repayment holiday period to be added to the
principle and repayment in equated monthly instalment(EMI) fixed.
1% interest concession may be provided by the bank on monthly basis, if
interest is serviced during the study period and subsequent moratorium
period prior to commencement of repayment.

7. Repayment period:
Repayment of the loan will be in equated monthly instalment for period as
under: -
Repayment period [after moratorium] = up to 15 years for all loans.
Note- No prepayment penalty will be levied for prepayment of loan anytime
during the repayment period.
While EMI based repayment is the generally accepted practice, many times
the salary level at the start of the career may not facilitate comfortable
payment of EMI in certain cases (e.g. professional like Doctor). Telescoping
of repayment with stepped up installments with passage of time may be
considered in such cases.

8. Processing charges:
Processing charges should not be levied. However, processing fees @ 0.50%
 of the loan application should be charged upfront in case of considering loan
for studies abroad. The fees however, be refunded upon the student taking
up, the course and availing loan, by reversal of charges through CBS manually.

9. Security:

Loans Security

Up to Rs.4.00 Clean. Parents to be joint borrowers, No security

All eligible Education loan should be covered under
Lakhs
Guarantee Fund scheme for Education Loan(CGFSEL).

Besides the parents executing the documents as joint

borrower collateral security in form suitable third party
Loan above
guarantee will be taken. In exceptional cases, may waive
Rs.4.00 lakhs
third party guarantee if satisfied with net worth/means of
and up to
the parents who would be executing documents as joint
Rs.7.50 lakhs
borrowers.
However, third party guarantee will be waived if the loan is
eligible for credit guarantee cover under guarantee fund
scheme for education loan(CGFSEL).
 Loan above Parents to be joint borrowers.
Rs.7.50 lakhs Tangible collateral security of suitable value acceptable to
Bank, along with the assignment of future income of the
students for payments of the installments.

10. Sanction/ disbursements- as per delegated lending/sanctioning powers:

a) Application will be received directly at bank branches to be routed through
Vidya Lakshmi Portal or through on-line mode under Vidya Lakshmi portal
(www.vidyalakshmi.co.in). Upon receipt of application, standard
acknowledgment giving reference number will be issued with student ID
and application ID. The acknowledgment will contain contact details of the
bank official who, could be contacted in case of delay in disposal of application.
b) Normally, sanction/ rejection will be communicated within 15 days of the
receipt duly completed application with supporting documents.
c) Students may submit their loan applicable either at the bank branches
near to the residence of parents or to the educational institution. However,
after the loan is sanctioned, the case be transferred to the bank branches
near to the institution for follow up with students/ institution. The KYC
compliance for the purpose has to be done by the branches nearest to the
residence of parents.
d) In normal courses, while appraising the loan the future income prospect of
the students only will be looked into.
e) In cases where it is not possible to sanction such loan, a reply may be sent
to the applicant in such a manner that no embarrassment is felt by him/her.
f) The loan is to be disbursed in stages as per requirements/ demand by
effecting payment directly to the institutions/ vendors of books/
equipment/ instruments to the extent possible.
g) At the time of each disbursement, the student should produce attested
copy of the last examination score card/ mark sheet/ progress card.
h) While disbursing loan is stage, B2/G2 should be invariably by obtained.
Deviation in this regard should not be allowed.
i) Rejection of loan application, if any, shall be done with concurrence of the
zonal head of the branches concerned and conveyed to the students
stating reason for rejection.

11. Follow up:

The branches should keep in touch with college/ university authorities so as to
obtain progress report at regular intervals in respect of the students financed
by them. In case of studies abroad, bank may obtain the SSN/ Unique
Identification number (UIN)/ identity card and note the same in banks records.
The UID number issued by UIDIA may also be captured in bank system as
and when available:
 Chapter 8:

Data Analysis & Interpretation

 Chapter 8: Data Analysis & Interpretation

Last 5 year’s loans

Years Loans

2014-15 68

2015-16 56

2016-17 81

2017-18 87

2018-19 128

Loans
140
128
120

100
87
80 81 60
68
56

40

20

0
2014-15 2015-16 2016-17 2017-18 2018-19
Total Loan Applications

Loans Application

Personal 67

Home 48

Vehicle 39

Education 26

Gold 19

Application

80

70

60

50

40

30

20

10

Personal Home Vehical Eduaction Gold

Approved Loan Application

Loans Approved

Personal 49

Home 32

Vehicle 22

Education 17
Gold 8

Approved
6%
13%
39%

17%

25%

Personal Home Vehicel Eduaction Gold

Last 4 year’s Education Loan

Years Loans

2015-16 29

2016-17 13

2017-18 22

2018-19 17

Loans

30

25

20

15

10

0
2015-16 2016-17 2017-18 2018-19
Education Loan within Year

Total Application 26

Approved Application 17

Rejected Application 09

Transfer Application 00
Case Study
Case I: The following is an education loan case of Mr. Abhijit Nitin Shinde who
wishes to avail a loan of Rs. 3, 23, 000 from the Bank 0f Maharashtra (928, Mantri
Centre FC road) for admission into a computer Engineering course dated on 9/11/2016.
Applicant: Mr. Abhijit Nitin Shinde
Co-Applicant: Mr. Nitin Shivaji Shinde
Amount of Loan applied: Rs. 3, 23, 000
Loan Sanctioned: Rs. 3, 23, 000
Total Expenses: Rs. 3, 27, 608
Margin: 1.41%(Rs. 4,608)
Repayment: Loan shall be repaid in 6 months after Getting Employment
Or
1 year after the completion of studies, whichever is earlier.
Moratorium Period: i) 36 months of education + 6 months if he gets Immediate
employment.
Or
ii) 36 months of education + 1 year of completing studies.
Course Applied: Degree in Computer Engineering (Direct 2nd year Admission)
Name of the Institution: XYZ College of Engineering
Duration of Course: 36 months

Course/ %Obtained Year ofPassing Board/University

Examination

SSC 66 2013 Maharashtra State

Board, Pune

Diplomain 73 20 Maharashtra State

Board, Pune
Computer

Engineering
 Assessment Method:

Assessment I:
Course Expenses: 3, 27, 608
Less Margin: 0.00
Eligible amount A: 3, 27, 608

Assessment II:

Loan amount Requested B: 3, 23, 000

Assessment III:

Maximum permissible loan: 10, 000, 000

Least amount of A, B, C: 3, 23, 000
Recommended loan amount: 3, 23, 000
Interpretation:
The bank has its own loan policy for education loan Mr. Abhijit Nitin Shinde who
wishes to avail loan of Rs. 3, 23, 000 approached the bank for education loan in
Kotak mahindra bank and submitted all the relevant papers and documents for
the purpose. In the above case all the parameters and conditions noted in the
policy have been complied and we have observed that the said case exactly fits
into the norms and hence the loan is recommended of approval.

Case II:
The following case is an education loan case of Mr. Adityavardhan Prshant Pore
who wishes to avail a loan of Rs. 4,98,750 from the Kotak mahindra bank for
admission into an Architecture course dated on 27/01/2018.
Applicant: Mr. Adityavardhan Prshsant Pore
Co-Applicant: Mr. Prshsant Popatrao Pore
Guarantor: Mr. Umesh Rambhau Giramkar
Amount of loan applied: Rs. 5,00,000
Loan Sanctioned: Rs. 4,98,750
Total Expenses: Rs. 5,25,000
Margin: 4.76%(Rs. 25,000)
Repayment: Loan shall be repaid in 6 months after getting the job
Or
1 year after the completion of studies, whichever is earlier.
Moratorium Period: 60 months of education + 6 months if she gets immediate
employment.
Or
60 months of education + 1 year of completing studies.
Course applied: B. Arch
Duration of Course: 60 months
Estimated EMI: Rs. 6,918
Assessment Method:

Assessment Method I:
Course Expenses: 5,25,000
Less Margin: 26,250
Eligible amount A: 4,98,750

Assessment II:
Loan amount requested B: 5,00,000

Assessment III:
Maximum permissible loan C: 10,00,000
Recommended amount: 4,98,750
Interpretation: The bank has its own loan policy for education loan
Mr.Adityavardhan Prshant Pore who wishes to avail a loan of Rs.498,750
approached the bank for education loan in Kotak mahindra bank and submitted
all the relevant paper and documents for the purpose. In the above case all the
parameters and conditions noted in the policy have been complied and we have
observed that the said case exactly fits into the norms and hence the loan is
recommended for approval.
 Comparison with other Banks
Note: Professional courses not approved by AICTE and conducted by Institutes
not recognized by State Universities is outside the purview of the eligibility under
the scheme.
Studies abroad:
Graduation: For job oriented professional/technical courses offered by reputed universities.
Post-Graduation: MCA, MBA, MS, etc.
Courses conducted by CIMA - London, CPA in USA, etc.
EXPENSES CONSIDERED FOR LOAN:
Fee payable to college/school/hostel*
Examination/Library/Laboratory fee.
Purchase of books/equipment’s/instruments/uniforms.
Caution deposit/building fund/refundable deposit supported by Institution bills/receipts.
Travel expenses/passage money for studies abroad.
Purchase of computers/Laptops - essential for completion of the course.
Life Insurance Premium for life cover of student/co-borrower
Any other expenses required to complete the course - like study tours, project
work, thesis, etc.
As per brochure/ demand letter from the institution.

QUANTUM OF FINANCE:
Need based finance subject to earning potential of student upon completion of
the course with and following ceilings:
Studies in India - Maximum Rs.10.00 lakh
Studies abroad - Maximum Rs.20.00 lakh.
MARGIN:
Up to Rs.4 lakhs: Nil
Above Rs.4 lakhs - Studies in India: 5%
Studies Abroad: 15%·
Scholarship could be included in margin: Margin to be brought in on year to year
basis as and when disbursements are made.

SECURITY:
up to Rs. 7.50 lakh:
Parents or Guardian to be joint borrowers (No collateral security or Third Party
Guarantee since covered under CGFSEL)
Above Rs.7.5 lakh:
Co-obligation of Parents together with tangible Collateral security of suitable
value along with the assignment of future income of the student for payment of
installments.

Note: The security can be in the form of land/building/Govt. Securities/Public

Sector Bonds/NSC/KVP/LIP/ Banks Term Deposit etc., in the name of Student/
Parent/ Guardian/Guarantor with suitable margin.

7. RATE OF INTEREST
Note:
a. Int. Concession for loans/advances to women beneficiary:0.50%p.a.
b. For Professional courses (like Engineering. /Medical/ Management,
etc.) int. concession: 0.50% (Maximum under (a) and (b), above is
1% p.a. subject to minimum one year MCLR)
c. 1% int. concession if interest is serviced during moratorium period,
where repayment holiday is specified for interest/repayment under
the scheme (concession available for moratorium period only)
d. Simple interest during the repayment holiday/moratorium period.
e. Penal interest @2% for loans above Rs.4 lakhs for the overdue
amount and overdue period

8. INSURANCE :
All the student borrowers are offered a specially designed OPTIONAL Term
Insurance covers and the premium can be included as an item of finance.

9. REPAYMENT :
Repayment holiday/Moratorium: Course period + 1 year
Repayment Period: 15 years after commencement of repayment

10. BANK CHARGES:

Document /Stamp At Actuals

Charges

11. OTHER CONDITIONS:

Loan to be disbursed in stages as per requirement / demand,
directly to the Institution/ Vendors of books/equipment’
s/instruments to the extent possible;
Student to produce mark list of previous term/semester before
availing next instalment;
Student / Parent to provide latest mailing address, in case of any change;
Student /Parent to inform Branch immediately on change of course
/completion of studies/termination of studies/ any refund of fees by
college /institution /successful placement /obtention of job/change of job
etc.,
 Chapter 9:

Findings of the Research

 Chapter 9: Findings of the Research
1) Education loan is priority loan.
2) In Kotak mahindra bank (Deccan Gymkhana), the maximum customers get the loan
within time.
3) It is found that, the maximum regular loan repayment form employed person.
4) There is very simple procedure followed by bank for education loan.
5) Easy repayment and less formality are the main factors determining
customer’s selection of education loans.
6) Customers are satisfied with the mode of repayment of installments.
7) Average time for the processing of loan is less i.e. approximately 7-8 days.
8) After studying cases, it is found that in some cases, loan is sanctioned due to strong
financial parameters.
9) We generally observed that the percentage of overdue on these loan is
comparatively low.
Chapter 10:

Limitation
 Chapter 10: Limitation
1) The study is based on the data of post three of four years only.
2) Confidential documents or objects to the firm were not available to access.
3) The study was related to the financial services sector where the
Kotak mahindra bank did not give each and every information of the
borrowers as a company protocol to maintain secrecy of its customers.
4) The data collected form Kotak mahindra bank cannot be
considered as real information.
Chapter 11:

Conclusions
 Chapter 11: Conclusions
The project was executed in Kotak mahindra bank processing deals with
calculation, checking the education loan applicant’s eligibility, and procedure of
sanctioning the loan etc. analysis of trend of education loans which is increasing
or decreasing.
The Bank has good hold over its customers. The organization believes in fast and
smart working. The main aim of Bank and staff is to achieve the determined target.
Credit is the core activity of the banks and important source of their earning
which go to pay interest to depositor.
Credit Appraisal is the internal bank process which is necessary to conduct for
every bank for loan distribution.
Credit Appraisal is the process of measure credit worthiness of borrower and
NPA is scale to measure the durability and creditability as well as goodwill of bank.
The Project has been very fruitful to me as I came to know about not only the
processing part of the education loan but the different case study in the bank for
the customers. Kotak mahindra bank has given me a great exposure and helped
me learn new things and about the working procedure in Bank.
 Bibliography
The following sources have been sought for the preparation of this report.

Websites
https://www.kotakmahindraltd.in
www.bankbazar.com
www.investorvillage.com
www.wikipedia.org
www.bim.edu
www.businessline.in
www.rbi.org