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A

DISSERTATION REPORT
ON
“COMPARATIVE STUDY OF EDUCATION LOAN
WITH REFERENCE TO SBI,PNB AND HSBC”

SUBMITTED BY:

SAURABH SHUKLA
SEMESTER: MBA IVth
ENROLLMENT NUMBER: 040387008219

INSTITUTE OF TECHNOLOGY AND SCIENCE


MOHAN NAGAR GHAZIABAD 201007
U.P

BATCH (2004-2006)
Declaration by the Candidate

I SAURABH SHUKLA student of MBA IV of Institute of Technology &

Science (I.T.S), Ghaziabad (2004-06) bearing enrollment number

040387008219 hereby declare that the research project report titled

COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE

TO STATE BANK OF INDIA (SBI), PUNJAB NATIONAL BANK (PNB)

AND HSBC.

Is the outcome of my own work and same has not been submitted to any

university/ institutions for the award of any degree or any professional diploma.

Date: ( )

Sign of candidate
ACKNOWLEDGEMENT

It has been a great learning experience on this project entitled “Comparative

Study Of Education Loan With Reference TO SBI, PNB, And HSBC”.

I would like to thank Prof. Girish Jain for imparting knowledge and guidance to

me in the field of Finance.

I would like to thanks Prof. Asif Haleem for his able guidance and support

through out my project completion.


Table of Content

1. Introduction of Education Loan

2. Research Methodology

3. PNB Education Loan Scheme

4. SBI Education Loan Scheme

5. HSBC Education Loan Scheme

6. Findings

7. Conclusion

8. Recommendations

9. Appendix

10. Bibliography
INTRODUCTION
INTRODUCTION

Education loans can augment the boundaries of what you can achieve

Education never ends – it is not said without reason. We are educated all our lives and

getting an education not only is a great achievement but something that gives you the

tools to find your own way in the world. Education is indispensable; little do we

realize how much more it can bring to us in terms of worldly amplifications. Anyone

can have propensity and the natural endowment for education. But one might not have

the resources to finance their education. You certainly can’t let lack of resources

impede you from advancing your prospects through education. Then you accidentally

stumble upon the word ‘education loans’. Loans for education – you have never

thought about it as a feasible arrangement. Education loans can open newer panoramas

in regard to your education aspirations.

Education loans are open to all people in all its myriad forms. Education loans can

realize your education plans or the education plans of your children. You can

strengthen you own future and the future of your son or daughter with education loans.

An extensive range of student and parent loans are presented under the category of

education loans. There are many types of education loans. Discerning about the types

of education loans will help you in making the accurate decision. The single largest

resource of education loans is federal loan. The two main federal education loan

programs are the Federal Family Education Loan Program and the Federal Direct

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

education is the lender.

Private education loans are offered to people so that they can provide financial backup

to their education plans. Private education loans are not endorsed by other government

agencies but are provided by other financial institutions. Private education loans

program are optimum for both undergraduate and graduate studies.

Formal education is requisite for future success. Though this is not a hard and fast

rule, but education certainly helps you in gaining an upper hand. With universities

getting expensive by each day an education loan will certainly give you an incentive

to go ahead with your education plans. Each year while contemplating on your

education plans the thought of finances almost invariably comes in. While working

towards you degree, you are constantly plagued about paying for the education fees,

books, and other living expenses. Education loans can provide funding for tuition fees,

board and room, books computer, and even student travel. An education loan can help

you with all these expenses. Education loans are sufficient enough to take care of all

these expenses. If you have been forced to drop your education for any reason, you

can still take up your education at any point of time. Irrespective of your age and also

where you have left your education.

There are no specific eligibility criteria for education loans. Any person who is in need

of sponsorship for education can find an education loan that befits his or her financial

necessity. Loan amount on education loans vary with the kind of education you want
to pursue. The repayment options with education loans will similarly accommodate

your personal financial preferences. You can either repay interest amount while still in

school or six months after graduation. Education loans offer up to ten years for

repayments. The refund alternatives on education loans also include deferment,

forbearance and consolidation. The various sites on education loans can give you

innumerable repayment options and monetary remuneration.

Education loans will help you in planning your life after graduation. However, an

education loan like every loan is a huge financial obligation. An education loans is

generally the first substantial loan for most people and therefore the first major

expense. Do not be completely dependent on your education loans for the funding of

your complete education. Try to apply for any other financial sustenance like

university grants, scholarships, fellowships, work study programs and assistance ship

and any other form of aid. This will certainly encourage a fluid dispensation of your

education loans. You can start by going to the financial aid office in your school or

university. It will provide you further insight to the kind of education loans, you must

apply for.

Education is an experience of life. It is so rewarding in itself that it helps you to

manage almost everything in your life. Education loans discipline your impulse

towards education and training into a fruitful contrivance. The payoff is delicious in

terms of improved quality of life. Education is expensive! Is it? With education loans
it can’t be. Now, you don’t have to take the road in front of you. Make your own road

with education loans.


RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY

PROJECT TITLE: “Comparative Study of Education Loan with

Reference to PNB, SBI and HSBC”.

To compare education loan schemes & policies of the Punjab National Bank (PNB),

State Bank of India (SBI) and Hong-Kong Shanghai Banking Corporation (HSBC)

METHODOLOGY:

In this research I have adopt the Exploratory Research method only for PNB, SBI

and HSBC Education loan schemes for just compare the offer document of these three

banks.

DATA SOURSE:

Primary data is taken from various internal documents and circulars issued by the

banks from time to time and Secondary data is taken from different books and

financial information published in newspapers and from the banks websites and other

related websites.
SCOPE:

Research scope is only three banks and these three banks are State Bank of India

(SBI), Punjab National Bank (PNB),and Hong-Kong Shanghai Banking Corporation

(HSBC).

LIMITATIONS:

There are some limitations in this research; these limitations are as follows –

• Time limitation

• Many banks provide education loan but in this research only three banks are

taken for consideration.

• Expenditure on research

• Some banks are not provided their internal information/circular.


PUNJAB NATIONAL

BANK (PNB)

EDUCATION LOAN

SCHEAMES
“VIDYA LAKSHYAPURTI – EDUCATION LOAN SCHEME”

1. OBJECTIVE

To provide financial support to deserving / meritorious students for pursuing

education in India and abroad. The Scheme aims at providing financial

assistance to meritorious students with an opportunity including undertaking

basic education and to the meritorious students to pursue higher,

professional and technical education.

2. ELIGIBILITY

2(i) Courses eligible

a) Studies in India

• School Education including Plus 2 stage

• Graduation courses B.A., B.Com., B.Sc.,etc.

• Post Graduation courses : Masters & Ph.D.

• Professional courses : Engineering, Medical , Agriculture, Veterinary,

Law, Dental, Management, Computer etc.


• Computer Certificate courses of reputed institutes accredited to

Department of Electronics or institutes affiliated to University

• Courses like ICWA, CA, CFA etc.

• Courses conducted by IIM, IIT, IISc, XLRI, NIFT, etc.

• Courses offered in India by reputed foreign University.

• Evening Courses of approved Institutes.

• Other Courses leading to Diploma / Degree etc. conducted by Colleges /

Universities approved by UGC / Govt. / AICTE / AIBMS / ICMR etc.

• Courses offered by National Institutes and other reputed Private

Institutes.

b) Studies abroad

• Graduation – For job oriented professional / technical courses offered by

reputed universities. Credentials of the Educational Institution may be got

certified from authenticated sources / Embassy in India.

• Post – Graduation – MCA, MBA, MS etc.

• Courses conducted by CIMA – London, CPA in USA etc.


2(ii) Student eligibility

• Should be an Indian National

• Secured admission to Professional / Technical courses through Entrance

Test / Selection process.

• Secured admission to foreign University / Institutions.

• Student should have secured pass marks in the qualifying Examination

for admission to Graduation Courses.

2(iii) Expenses considered for Loan

• Fee payable to Collage / School / Hostel.

• Examination / Library / Laboratory fee.

• Purchase of books / equipments / instruments / uniforms.

• Caution Deposit / Building Fund / Refundable Deposit supported by

Institution Bills / Receipts.

• Travel Expenses / Passage money for studies abroad.

• Purchase of computers – essential for completion of the Course.

• Any other expense required to complete the course – like study tours,

project work, thesis, etc.


3. QUANTUM OF FINANCE

Need based finance, subject to repaying capacity of the parents / students with

margin and the following ceilings :-

• Studies in India - Maximum Rs. 7.50 lacs.

• Studies abroad - Maximum Rs. 15.00 lacs.

4. MARGIN

Upto Rs. 4.00 lacs : Nil

Above Rs. 4.00 lacs : Studies in India 5%

Studies in Abroad 15%

• Scholarship / assistantship to be included in Margin.

• Margin may be brought in on year-to-year basis as and when

disbursements are made on a pro-rata basis.


5. SECURITY

No Security may be insisted upon for loans upto Rs. 4.00 lacs. However, for

loans above Rs. 4.00 lacs, Collateral Security of Suitable value (atleast equal

to loan amount) or co-obligation of parents / guardian / third party alongwith

assignment of future income of the student for payment of instalment may be

obtained viz., :-

Upto Rs. 4.00 lacs : No Security.

Above Rs. 4.00 lacs : Collateral Security of Suitable value

(equivalent to 100% of the amount of loan)

or co-obligation of parents / guardian / third

party.

In addition to above assignment of future income of the student for payment

of instalments (stands included in the Agreement).

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

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

Sector Bonds / Units of UTI, NSC, KVP, LIC Policy, Gold, Shares /

Debentures, Bank Deposit in the name of the student parent / guardian or any

other third party with suitable Margin.

• Wherever the land / building is already mortgaged, the unencumbered portion

can be taken as security an II charge basis provided it covers the required Loan

amount.

• In case the loan is given for purchase of Computer, the same to be

Hypothecated to the Bank.

6. RATE OF INTEREST

Upto Rs.4.00 lacs PTLR

Above Rs.4.00 lacs PTLR + 1%

• The interest to be debited monthly on simple basis during the Repayment

holiday / Moratorium period.


• Penal interest @ 2% be charged for above Rs. 2.00 lacs for the overdue

amount and overdue period.

7. LONING POWERS

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

• No application for educational loan received should be rejected without

the concurrence of the next higher authority.

8. REPAYMENT

Repayment Holiday / Moratorium Course period + 1 year OR 6 months

after getting job, whichever is earlier.

The loan is to be repaid in 5-7 years after commencement of repayment. If the student

is not able to complete the course within the scheduled time, extension of time for
completion of course may be permitted for a maximum period of 2 years. If the

student is not able to complete the course for reasons beyond his control, sanctioning

authority may at his discretion consider such extensions as may be deemed necessary

to complete the course.

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

the principal and repayment in Equated Monthly Instalments (EMI) be fixed.

• 1% Interest concession may be provided by Incumbents to lonees if the

interest is serviced by them during the study period when repayment holiday

is specified for interest / repayment under the Scheme.

Interest concession is to be provided to borrowers only at the time of final

repayment of the loan.

9. POST SANCTION FOLLOW UP

Branches to contact college / university authorities to send the progress

report at regular intervals in respect of students who have availed loans.

10. UPFRONT FEE

NIL
11. TIME NORMS

Loan applications have to be disposed of within a period of 15 days to one month

but not exceeding the time norm stipulated for disposing of loan applications under

Priority Sector Lending.

12. CAPABILITY CERTIFICATE

Since, some of the foreign universities require the students to submit a

certificate from their bankers about the sponsors solvency / financial

capability, with a view to ensure that the sponsors of the students going

abroad for higher studies are capable of meeting the expenses till completion

of studies, capability certificate may be issued in such cases. For this

financial and other supporting documents may be obtained from the

applicant.

13. LOAN APPLICATION

Form No. PNB 813.


14. MODE OF APPLICATION OF INTEREST

Interest on Education Loan accounts shall be worked out at the end of each

month and recorded on a separate sheet in the ledger but not debited to the

borrower’s account. Instead, it should be debited to a separate account

opened in the Subsidiary General ledger titled ‘Interest Accrued on

Advances under Education Loan Scheme’ forming one of the components of

the main head of General Ledger. ‘Interest Accrued on Advances’ and

credited to Revenue Head Income ‘Interest on term loan’ till the

commencement of repayment of first instalment. On the date fixed for

commencement of repayment, the whole amount of interest so far worked

out and recorded as above should be debited to the borrower’s account by

corresponding credit to the ‘Interest Accrued on Advances under Education

Loan Scheme’. Repayment of loan and interest may be determined keeping

in view the above procedure for charging of interest.

15. CONFIDENTIAL REPORTS


On Borrower(s): No confidential report on the borrower will be required as

the application for loan will indicate the information required to be furnished

in the confidential report.

On Guarantor(s) / Co-obligants : Form No. PNB 905 /282(C).

16. DOCUMENTATION

i) Agreement (Annexure -1) duly stamped, to be taken in case where the

student is minor. Further, in case of Minor student, on attaining his/her

majority confirmation from student be obtained as per Annexure III.

ii) Agreement (Annexure –II) duly stamped , to be taken in case where the

student is Major.

iii) Letter of Guarantee (PNB 785) duly stamped as an Agreement to be

taken in case of loan amount is above Rs. 4 lacs.

iv) In case of collateral security is to be taken is mortgage, procedure given

in Book of Instruction on Loans to be followed.

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

17. DISBURSEMENT
Education loan is to be disbursed in the form of term loan. A limit upto which

advance is to be allowed during each year will be set up. Each time the borrowing

scholar is in need of funds to pursue his studies; he will approach the lending office

and will explain his needs to the Incumbents Incharge will permit drawing on the

borrower’s account within the limit fixed. This will also enable the Incumbent In

charge to remain in close touch with the borrowing students’s activities.

• The loan to be disbursed in stages as per the requirement / demand directly

to the Institutions / Vendors of Books / equipments / instruments to the

extent possible.

• LOAN TO BE SANCTIONED BY THE BRANCH NEAREST TO THE

PLACE OF DOMICILE OF THE STUDENT.

In case of , purchase of stationary and books, loan may be disbursed in cash on

declaration by the applicant and production of bills.

18. CLASSIFICATION

Advances allowed under the Scheme will be classified under Priority Sector.
19. CHECK LIST

To facilitate expeditious disposal of applications, a check-list regarding documents,

security etc. alongwith application forms for Education Loans be provided to

intending borrowers. An illustrative check-list enabling a ready reference, so that

intending borrowers can furnish all related documents / papers in one lot, is given

below :-

• Loan application on Bank’s format.

• Passport size photograph.

• Proof of Address.

• Proof of having secured pass marks in last qualifying examination.

• Letter of admission in professional, technical or vocational courses.

• Prospectus of the course wherein charges like Admission Fee, Examination

Fee, Hostel Charges etc. are mentioned.

• Details of Assets & Liabilities of parents.

• In case loan amount is above Rs. 4.00 lacs :


Particulars of Guarantors and details of their Assets & Liabilities.

If immovable property offered as Collateral Security – copy of Title

Deed, Valuation Certificate and Non-encumberance Certificate from

approved Lawyer of the Bank.

• Photocopy of Passport & Visa, in case of study abroad.

• Any other document / information, depending upon the case and purpose

of the loan.

20. POST SANCTION SUPERVISION

The Bank will reserve the right of giving loan under this Scheme to any scholar or

continue / discontinue the yearly disbursement to a borrower under the Scheme,

depending upon whether or not he / she shows good results at the institution he

/she has joined for studies and whether of not reports about his / her conduct are

satisfactory.

Such reports will be required to be produced to the Incumbents Incharge of the

lending office before the start of each academic year subsequent to the first year.

Loan pass book (PNB589) be issued to the borrower containing details such as date

of sanction of loan, amount of loan, amount of loan sanctioned, subsidy received


(if any) rate of interest, amount due under each instalment, due date of instalment

etc.

21. OTHER CONDITIONS

Zonal Managers and above may consider relaxation with regard to

Eligibility, Margin and Security norms on merits of each case.

No Due Certificate need not be insisted upon as a pre-condition for considering

educational loan. However, Branches may obtain a declaration / an affidavit

confirming that no loans are availed from banks.


STATE BANK OF

INDIA (SBI)

EDUCATION LOAN

SCHEAMES
SBI EDUCATION LOAN

A term loan granted to Indian Nationals for pursuing higher education in India or

abroad where admission has been secured.

1. ELIGIBLE COURSES

All courses having employment prospects are eligible.

• Graduation courses/ Post graduation courses/ Professional courses

• Other courses approved by UGC/Government/AICTE etc.

2. EXPENSES CONSIDERED FOR LOAN

• Fees payable to college/school/hostel

• Examination/Library/Laboratory fees

• Purchase of Books/Equipment/Instruments/Uniforms

• Caution Deposit/Building Fund/Refundable Deposit

• Travel Expenses/Passage money for studies abroad

• Purchase of computers considered necessary for completion of course

• Cost of a Two-wheeler upto Rs. 50,000/-


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

3. AMOUNT OF LOAN

• For studies in India, maximum Rs. 10 lacs

• Studies abroad, maximum Rs. 20 lacs

4. INTEREST RATE

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

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

5. PROCESSING FEES

• No processing fee/ upfront charges

• Deposit of Rs. 5000/- for education loan for studies abroad which will be

adjusted in the margin money

6. REPAYMENT TENURE
Repayment will commence one year after completion of course or 6 months after

securing a job, whichever is earlier.

Repayment Period
Place of Study Loan Amount
in Years

Up to Rs. 7.5 lacs 5-7


In India
Above Rs. 7.5 lacs 5-10
Up to Rs. 15 lacs 5-7
Abroad
Above Rs. 15 lacs 5-10

Security
Amount Studies In India Studies Abroad
Upto Rs. 4 lacs No Security No Security
Above Rs. 4 lacs to Rs. 7.50
Third Party Guarantee Third Party Guarantee
lacs
Above Rs. 7.50 lacs to Rs. 10 Tangible Collateral Tangible Collateral security of

lacs(India)/ Rs. 15 security for full value suitable value of loan or third

lacs(Abroad) of loan party guarantee


Tangible Collateral security for
Rs 15 lacs to Rs. 20 lacs ___
full value of loan

7. MARGIN
For loans up to Rs.4.0 lacs : No Margin

• For loans above Rs.4.0 lacs:

o Studies in India: 5%

o Studies Abroad: 15%

8. DOCUMENTATION REQUIRED

• Completed Education Loan Application Form.

• Mark sheets of last qualifying examination

• Proof of admission scholarship, studentship etc

• Schedule of expenses for the specified course

• 2 passport size photographs

• Borrower's Bank account statement for the last six months

• Income tax assessment order, of last 2 years

• Brief statement of assets and liabilities, of the Co-borrower

• Proof of Income (i.e. Salary slips/ Form 16 etc)

* Conditions Apply

EDUCATION LOAN SCHEME FOR STUDENTS OF ISB


Loan amount Upto 95% of all costs upto a maximum of

Rs.14.50 lac. (Taking into account expenditure

of married students and cost of a laptop, which

is essential for students.)


Margin 5%
Rate of Interest  9% (Floating). EMI*: Rs.1287/-per lac.

 8.5% (Floating), if tangible security

equivalent to 50% of loan amount is

furnished. EMI*: Rs.1260/- per lac.

 Should a tangible collateral security

equivalent to 50% of outstanding loan

amount be furnished midway through

the tenure of the loan, the concession of

50 basis points in the rate of interest shall

become applicable from the month

following the month in which such

security is furnished.

 Only Simple Interest will be charged

during the course and moratorium period.

 The rate of interest will not change during

the complete tenure of the loan.


 Interest is calculated on daily reducing

balance.EMI of 9 years & 9 months


Repayment Up to 10 years. A customised repayment

schedule taking into account individual

repayment capacity of the student is permissible.


Moratorium Period Up to 3 months after completion of course.
Co-borrower Yes. The loan will be granted jointly with the

parent/ guardian.
Security  Lien on the original Certificate and Marks

Sheet of the student. The Certificate will

remain in custody of SBI during the

currency of the loan.

 Third party guarantee (TPG), preferably

of earning sibling of the student or a

person known to the Bank i.e., a person

who is our customer or he/she is a reputed

person or a guarantor of one of our

borrowers.
Application Processing Time Loans will be sanctioned and disbursed within

three days, after submission of application form,

complete in all respects except where mortgage


of immovable property is to be created.
Processing Fees/ Prepayment Nil.

ChargesForeclosure Charges
Takeover of Education Loan Permissible

from other Banks/ Financial

Institutions for existing

students and alumni


Contact Branch Hyderabad University Campus Branch,

Gachibowli, Hyderabad- 500019

Telephone: 040-23011301/289

Fax: 040-23011617

Documents to be enclosed
i. Mark sheet of last qualifying examination for school and graduate studies

in India.
ii. Copies of letter conferring scholarship, freeship, studentship etc.
iii. Documents evidencing the duration of course and commencement thereof

viz. prospectus or certificate from the competent authority of the

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

For Self-Employed/Professionals and Businessmen


• Proof of income.

• Income Tax/Wealth Tax (if applicable) assessment orders not more

than 2 years old.

• Assets and Liabilities.

If Collateral Security is Mortgage of Landed Property


• Original Sale Deed

• Original receipt of payment made for registrar

• Society share certificate

• Non encumbrance or certificate from advocate

• Valuation Report
HSBC
EDUCATION LOAN
SCHEAMES

FEATURES AND BENEFITS

Get financial flexibility with HSBC educational loans


LOAN AVAILABILITY

Educational loans are available for studies in India or abroad. Avail of loan

amounts ranging from a minimum of Rs. 50,000 to a maximum of Rs.

25,00,000*.

SMOOTH REPAYMENT

Our Equated Monthly Installments (EMIs) scheme allows for easy repayment

and saves you from hassles.

Flexibility

Our loans are tailor-made to your needs. Opt for tenures up to 4 years for

unsecured loans and 7 years for secured loans (against security of a residential

property / shares).

COMPREHENSIVE COVERAGE

Educational loan also covers expenses for boarding and lodging.

HSBC banking benefits

Take advantage of HSBC's banking benefits; let us help you open a Savings

account or avail of a debit card.

LOW INTEREST RATES

Bank offer you competitive interest rates on your educational loans. Bank also

give you the option of choosing between a fixed or floating rate of interest (the

floating rate option is available only in case of secured loans).

Special Relationship Discounts


You are also eligible for special discounts exclusively designed for HSBC

customers (of 6 months or more).

* Loans above Rs.500,000 are available against security of residential

property/shares. Loans to value ratio to be less than or equal to 50% of the

property valuation.

Loans available for study at select institutes, based on their accreditation.

The interest rate on your floating rate Home loan is linked to HSBC's Mortgage

Lending Rate (MLR) and any revision in the MLR would impact your interest

rate. The MLR is currently 9.5%.

Terms and conditions apply. All loans at the sole discretion of The Hongkong

and Shanghai Banking Corporation Limited, India. Loans available for

applicants and properties in and around the limits of cities where HSBC has

branches and is subject to change from time to time.

Please be advised that vide Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a

service tax of 10% + 2% education cess thereon will be applicable on our fees

and charges.

ELIGIBILITY

To qualify for an Educational Loan, the following criteria apply.

1 Applicant should be a resident Indian


2 Minimum net annual income of Rs 150,000 for secured loan and Rs

75,000 for unsecured loan

3 Student must have secured admission to a recognised college/university

in India or abroad*

* Loans available for study at select institutes, based on their accreditation

The interest rate on your floating rate Home loan is linked to HSBC's Mortgage

Lending Rate (MLR) and any revision in the MLR would impact your interest

rate. The MLR is currently 9.5%.

Terms and conditions apply. All loans at the sole discretion of The Hongkong

and Shanghai Banking Corporation Limited, India. Loans available for

applicants and properties in and around the limits of cities where HSBC has

branches.

Vide Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a service tax of 10% + 2%

education cess thereon will be applicable on our fees and charges.


FINDINGS

FINDINGS

Sl. Parameter Private Banks Public Banks

No.
1. Beneficiaries Economically affluent Economically weaker

sections of society. Sections also.

2. Objective Commercial National and social

3. Aimed at Profit earning Not profit alone

4. Margin money Must Flexible

5. Security Necessary Less important

6. Interest rate High Reasonable

7. Attitude Rigid and strict Flexible and liberal

Sl. Basis of PNB SBI HSBC


No. Difference
1 Max. loan for Rs. 7.50 Lacs Rs. 10.00 Lacs Min. Rs.
studies in India 50,000 to a
Max. of Rs.
25,00,000
2 Max. loan for Rs. 15.00 Lacs Rs. 20.00 Lacs Not Available
studies in
Abroad
3 Interest Rates Upto Rs.4.00 lacs Upto Rs. 4 lakh 9.5% p.a +
PTLR 10.50% p.a. 10% service
Above Rs.4.00 lacs Above Rs. 4 lakh tax + 2%
PTLR + 1% 11.50% p.a. education
cess
4 Repayment one year after one year after
Period starts completion of course completion of course Not Available
from or 6 months after or 6 months after
securing a job, securing a job,
whichever is earlier. whichever is earlier.

5 Repayment To be repaid in 5-7 In India : Up to Rs. up to 4 years


Period years after 7.5 lacs - 5-7 years for unsecured
commencement of Above Rs. 7.5 lacs -5- loans and 7
repayment 10 years years for
In Abroad : Up to Rs. secured loans
15 lacs – 5-7 years (against
Above Rs. 15 lacs – 5- security of a
10 years residential
property /
shares).

6 Margin Upto Rs. 4.00 lacs Upto Rs. 4.00 lacs Not Available
: Nil : Nil
Above Rs. 4.00 lacs: Above Rs. 4.00 lacs:
Studies in India Studies in India
5% 5%
Studies in Studies in
Abroad 15% Abroad 15%

7 Processing Fees No processing No processing Not Available


fee/upfront charges fee/upfront charges

Deposit of Rs. 5000/-


for education loan for
studies abroad which
will be adjusted in the
margin money
8 Security Upto Rs. 4.00 Upto Rs. 4.00 Not Available
lacs : No Security lacs : No Security
Above Rs. 4.00 lacs : Above Rs. 4.00 lacs to
Collateral Rs. 7.50 lacs :
Security of Suitable Third Party
value Guarantee
(equivalent to 100% Above Rs. 7.50 lacs to
of the amount of Rs. 10 lacs(India) :
loan) Tangible Collateral
or co-obligation of security for full value
parents / guardian / of loan
third Above Rs. 7.50 lacs to
party. Rs. 15 lacs(Abroad) :
Tangible Collateral
security of suitable
value of loan or third
party guarantee
Rs 15 lacs to Rs. 20
lacs (Abroad) :
Tangible Collateral
security for full value
of loan

CONCLUSION
Conclusion

On the basis of above findings and comparison among PNB, SBI and HSBC it is

clearly observe that public banks have more reach, variety and flexibility in their

education loan schemes whereas private banks uses some new concepts in their

offerings like tailor made repayment system.

Maximum loan for studies in India is ranging from Rs. 7.50 lacs to 10.00 lacs and for

studies in Abroad it is Rs. 15-20 lacs by public banks and in the case of private banks,

they provide minimum Rs. 50,000 to a maximum of Rs. 25,00,000 lacs.


Interest rates are vary from 9.5% to 11.5% p.a and PNB uses PTLR system.

All banks have same repayment facility i.e. one year after completion of course or 6

months after securing a job, whichever is earlier.

Repayment period is also vary from 5-7 year after commencement of repayment in the

case of education loan is taken from public banks and it is 4-7 years on the basis of

unsecured and secured education loan taken from private banks.

Margin is same in PNB and SBI i.e.

Upto Rs. 4.00 lacs : Nil

Above Rs. 4.00 lacs : Studies in India 5%

Studies in Abroad 15%

PNB and SBI do not charge any processing fees but SBI takes Deposit of Rs. 5000/-

for education loan for studies abroad which will be adjusted in the margin money
RECOMMENDATIONS

RECOMMENDATIONS

• Banks should go for advertisement Campaign from Scratch.

• Banks should try to cash its brand image.

• Strong branch network should be made and staff personnel’s incentives

should be increased.

• Banks should increase its product line in education loans.

• Special scheme for non-professional students as well as for professional

students should be increased.


• Banks should introduce some new model keeping in mind the loan suitable

for medium income group customer.

• Presence of some famous personality in Advertisement or in Pamphlet’s

insuring better retention in the mind of customers.

• In this age of information, the customer before taking loans collects all the

information about various brands. The banks should provide a combined

booklet of the product range in order to upgrade the knowledge of future

takings of loans.
APPENDIX

FOR PNB : (To be taken in case where the student is Minor)

ANNEXURE I

AGREEMENT FOR EDUCATION LOAN

This Agreement is made at_____________on this_______day of _____20 __ between

Shri / Smt ____________________________, son / wife of Shri _________ ______

___ r/o ________ ________ ______ (hereinafter referred to as ‘parent / guardian’) Sh.

/ Kumari _____________________ minor aged ________ years (date of birth

_________), S/o / D/o Sh./ Smt. ____________________ r/o


______________________________ (hereinafter referred to as ‘student’), represented

by his / her natural / court guardian Sh./ Smt. ____________________ (both parent /

guardian and student are collectively called the ‘borrowers’ which expression shall

unless repugnant to context include his / her heirs, executors, administrators and

assigns) of the One Part and Punjab National Bank a body corporate constituted under

the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 having

its head office at 7, Bhikhaji Cama Place, New Delhi and amongst other a branch

office at _______ _______ ______ ______ (hereinafter called the ‘bank’ which term

shall unless repugnant to context include its successors and assigns) of the Other Part.

WHEREAS

A) Sh. / Smt ___________________ (parent / guardian) represents that

his/ her ward Sh. / Kumari _________________(hereinafter called the

student) is desirous of pursuing / continuing his / her studies at

______________________ for a period of __________ but is unable

to do so due to paucity of funds.

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

for studies of his/her ward, applied to the bank for a loan of Rs.

____________(rupees_____________________) which the bank has

agreed to grant on terms and conditions herein arter appearing:

NOW THIS AGREEMENT WITNESSETH AS UNDER

1. The total amount of the loan amounting to Rs. __________ will be disbursed

by the bank to the borrowers as under :-

State the manner of disbursement


2. The amount of loan will be utilized by the borrowers only for the purpose of

persecuting studies of the ‘student’ , such as payment of fees payable to

college / school/ hostel, examination / library laboratory fee , purchase of

books / equipment / instruments / uniform caution deposit / building fund

/refundable deposit / supported by the institution bills / receipts, travel

expenses / passage money for studies abroad, purchase of computers-

essential for completion of the course any other expenses required to

complete the course- like study tour project work, thesis etc.

3. At the end of each academic year, borrowers will produce a certificate from

the head of the institution at which the student is studying testifying the

results achieved by the student during and at the end of the year as well as

about his conduct. If the said certificate is not produced or the certificate

furnished for any year is not considered satisfactory the Bank will (in its

absolute discretion) have the right of stop giving any further financial

assistance to the borrower in terms of this agreement notwithstanding the

fact that the total amount of the loan as agreed to in paragraph above has not

been disbursed to him. The Bank will be entitled as its option to recall the

loan already , give together with the interested accrued thereon, by a demand

in writing.

Applicable in case loan is above Rs. 4.00 lac


4. The borrowers will secure the loan by providing a suitable surety an unless

he has furnished the same he will not avail the loan or any part thereof.

5. The interest on the loan will be payable at the PTLR rate /_____% over the

PTLR with ________rest. Provided that the interest payable by the

borrowers shall be subject to change in interest rates made by RBI / Bank

from time to time.

(PTLR means Prime Term Lending Rate of the bank prescribe by the

bank form time to time. The PTLR as on date is ______% p.a.)

In the event of there not being any PTLR, the borrower agrees to pay interest

at the rate as prescribed by the bank.

6. Subject to what is provided in para 3 above, the borrowers will repay the

loan together with interest accrued thereon by equal monthly installments in

_______ year after commencement of the repayment i.e. one year after the

course period or 6 months after getting job, whichever is earlier. The

extension of the repayment period, if the student is not able to complete the

course for reasons beyond his/her control, will be in the absolute discretion

of the Bank.

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

only not to disburse further loan but also recall the outstanding under the

loan already disbursed, irrespective of the instalments fixed.


8. The borrowers will, during the period of their indebtedness to the bank, keep

the Bank informed of the change in their address, vocation and income from

time to time.

9. The student-borrower under takes to remit and if need be, give instructions /

authorization to his / her employer to remit, the salary to the extent necessary

or even more , if the borrower so desires , to the account of the borrower.

In witness whereof the parties to these presents have set their hands on the day,

month and year first mentioned above.

__________________________

BORROWERS

FOR PUNJAB NATIONAL BANK

(Authorized signatory)

(To be taken in case where the student is Major)

ANNEXURE II

AGREEMENT FOR EDUCATION LOAN


This Agreement is made at_____________on this_______day of _____20 __ between

Shri / Smt / Km. ____________________________, son / daughter of Shri _________

______ ___ r/o ________ ________ ______ (hereinafter referred to as ‘student’) and

Sh. / Smt. _____________________ son / daughter of____________________ r/o

______________________________ (hereinafter referred to as ‘parent’), (parent and

student collectively hereinafter called the ‘borrowers’ which expression shall unless

repugnant to context include their heirs, executors, administrators and assigns) of the

One Part and Punjab National Bank a body corporate constituted under the Banking

Companies (Acquisition & Transfer of Undertakings) Act, 1970 having its head office

at 7, Bhikhaji Cama Place, New Delhi and amongst other a branch office at _______

_______ ______ ______ (hereinafter called the ‘bank’ which term shall unless

repugnant to context include its successors and assigns) of the Other Part.

WHEREAS

A) The Student and Parent (Borrowers) represents that Sh. / Kumari

_________________(student) is desirous of pursuing / continuing


his / her studies at ______________________ for a period of

__________ but is unable to do so due to paucity of funds.

AND

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

assistance for his/her studied, applied to the bank for a loan of Rs.

____________(rupees_____________________) which the bank has agreed to

grant on terms and conditions herein arter appearing:

NOW THIS AGREEMENT WITNESSETH AS UNDER


1. The total amount of the loan amounting to Rs. __________ will be disbursed by

the bank to the borrowers as under :-

State the manner of disbursement

2. The amount of loan will be utilized by the borrowers only for the purpose of

persecuting studies of the ‘student’ , such as payment of fees payable to

college / school/ hostel, examination / library laboratory fee , purchase of books

/ equipment / instruments / uniform caution deposit / building fund /refundable

deposit / supported by the institution bills / receipts, travel expenses / passage

money for studies abroad, purchase of computers-essential for completion of

the course any other expenses required to complete the course- like study tour

project work, thesis etc.

3. At the end of each academic year, borrowers will produce a certificate from the

head of the institution at which the student is studying testifying the results

achieved by the student during and at the end of the year as well as about his

conduct. If the said certificate is not produced or the certificate furnished for

any year is not considered satisfactory the Bank will (in its absolute discretion)

have the right of stop giving any further financial assistance to the borrower in

terms of this agreement notwithstanding the fact that the total amount of the

loan as agreed to in paragraph above has not been disbursed to him. The Bank
will be entitled as its option to recall the loan already , give together with the

interested accrued thereon, by a demand in writing.

Applicable in case loan is above Rs. 4.00 lac

4. The borrowers will secure the loan by providing a suitable surety an unless he

has furnished the same he will not avail the loan or any part thereof.

5. The interest on the loan will be payable at the PTLR rate /_____% over the

PTLR with ________rest. Provided that the interest payable by the borrowers

shall be subject to change in interest rates made by RBI / Bank from time to

time.

(PTLR means Prime Term Lending Rate of the bank prescribe by the

bank form time to time. The PTLR as on date is ______% p.a.)

In the event of there not being any PTLR, the borrower agrees to pay interest

at the rate as prescribed by the bank.

6. Subject to what is provided in para 3 above, the borrowers will repay the loan

together with interest accrued thereon by equal monthly installments in

_______ year after commencement of the repayment i.e. one year after the

course period or 6 months after getting job, whichever is earlier. The extension

of the repayment period, if the student is not able to complete the course for

reasons beyond his/her control, will be in the absolute discretion of the Bank.
7. In the event of death of any of the borrowers, the bank shall be entitled not only

not to disburse further loan but also recall the outstanding under the loan

already disbursed, irrespective of the installments fixed.

8. The borrowers will, during the period of their indebtedness to the bank, keep

the Bank informed of the change in their address, vocation and income from

time to time.

In witness whereof the parties to these presents have set their hands on the day,

month and year first mentioned above.

For self and as natural guardian/ guardian of

Sh./ Kumari__________________________

BORROWERS

FOR PUNJAB NATIONAL BANK

(Authorized signatory)
ANNEXURE-III

Date:_____________________

The Manager,

Punjab National Bank,

BO:___________________

Reg : My Education Loan For Rs._______

I write to confirm that you were pleased to grant Education Loan of Rs.____________

to me, represented by my guardian, Shri / Smt. _________________ for my

education. My said guardian executed the required loaning documents in your favour

in consideration of the said loan.

I inform you that I have attained majority on ______________ and request you to

disburse the remaining amount loan of Rs. _______________ to me out of the loan

agreed to be granted by you. I am already and willing to execute any further

documents in your favour for the said loan, if so required by you. I also confirm that

the amount of loan of Rs. ___________ already disbursed to my benefit and the same

is binding on me and I agree to repay the same with interest as agreed.

I further undertake that I will repay the loan amount granted by the bank for my

education, in terms of the agreement dated _______________ as executed by Shri /

Smt. ______________________, my parents / guardian representing me , interalia

from out of my future income and if need be , I will give instructions / authorization to

my employer to remit the salary to the extent necessary or even more.


I will keep the bank informed of my address and my profession / employment from

time to time.

Yours Faithfully

____________________

(Borrower)

Address:-_______________________
EDUCATIONAL LOAN APPLICATION FORM FOR HSBC

First Name
Middle Name
Last Name

Address

City
Telephone
Mobile
Email
Date of Birth
Convenient time to contact you
Between and
Are you interested in a free session on overseas studies with an Educational
Counsellor
Details of the Educational Institute you are planning to study at :
Name
Country
Are you an existing HSBC
customer?
If yes, please provide us the Card No or Account No
Account No.
Credit Card No.
BIBILIOGRAPHY
BIBILIOGRAPHY

Books:-

• Indian Financial System and Commercial Banking , by IIBF

mumbai (page no. 259)

• Management of Indian Financial - R.L.Gupta

Websites:-
• www.pnbindia.com

• www.statebankofindia.com

• www.hsbc.com