Poonam Vermars1901b27

TERM PAPER
On
Personal Finance Planning
Topic ::- Develop a competitive Product of Education Loan

and compare it with existing plans of 2 Private and 2 Public Sector companies
each and explain how features of your product are better than the 4 products
which you are considering.
DEPARTMENT OF MANAGEMENT
SUBMITTED TO-
Mr. Lalit K. Bhardhvaj

SUBMITTED BY:
Poonam Verma
Roll no. RS1901B27
Section - S1901
MBA (III)
Reg.no.10905423
Lovely Professional University

Phagwara
L.P.U Page 1
Decleration Regarding Term Paper
TOPIC OF TERM PAPER : Develop a competitive Product of
Education Loan and compare it with existing plans of 2 Private and 2 Public
Sector companies each and explain how features of your product are better
than the 4 products which you are considering.
COURSE INSTRUCTOR : Mr. Lalit K. Bhardhvaj

DATE OF SUBMISSION : 13/11/2010
ROLL NO. : B-27
SECTION: RS1901
COURSE CODE: MGT-636
Declaration:
I declare that this assignment is my individual work. I have

not copied from any other student’s work or from any other source
except where due acknowledgement is made explicitly in the text, nor
has any part been written for me by another person.
Student’s Signature: POONAM VERMA.
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ACKNOWLEDGEMENT::
I take this opportunity to present my votes of thanks to all those guidepost who really
acted as lightening pillars to enlighten our way throughout this project that has led to
successful and satisfactory completion of this study.
We are really grateful to our professor for providing us with an opportunity to undertake
this project in this university and providing us with all the facilities. We are highly
thankful to MR. LALIT KUMAR & MISS. NITIKA SHAGAL for his active support,
valuable time and advice, whole-hearted guidance, sincere cooperation and pains-taking
involvement during the study and in completing the assignment of preparing the said
project within the time stipulated.
Lastly, We are thankful to all those, particularly the various friends , who have been
instrumental in creating proper, healthy and conductive environment and including new
and fresh innovative ideas for us during the project, their help, it would have been
extremely difficult for us to prepare the project in a time bound framework.
Name –Poonam Verma

Regd.No-10905423,
Roll.No-RS1901B27
L.P.U Page 3
Index-
 Introduction OF EDUCATION LOAN.

Procedure and term & condition by RBI.
State bank of India
State bank of Patiala
HDFC
Axis bank
Comparison of 4 Banks.
My competitive education loan product.
Procedure & term and conditions
Benefits of my product
Comparison
Reasons
 Advantages of education loan
 Disadvantages of education loan
References
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Introduction of EDUCATION LOAN
Want to study ahead but the fees are too high. Looking for a way to fund your college
studies. All you need is an Education Loan. There are a variety of education loans out there,
available for all students.
Education is central to the Human Resources Development and empowerment in any country.
National and State level policies are framed to ensure that this basic need of the population is
met through appropriate public and private sector initiatives. While government endeavour to
provide primary education to all on a universal basis, higher education is progressively
moving into the domain of private sector. With a gradual reduction in government subsidies
higher education is getting more and more costly and hence the need for institutional funding
in this area.
The scope of education has widened both in India and abroad covering new courses in
diversified areas. Loans for education should be seen as an investment for economic
development and prosperity. Knowledge and information would be the driving force for
economic growth in the coming years.
Based on recommendations made by a Study Group, IBA had prepared a Model Educational
Loan Scheme in the year 2001 which was advised to banks for implementation by Reserve
Bank of India vides circular No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April
28, 2001 along with certain modifications suggested by the Government of India. In line with
the announcement made by the Hon'ble Finance Minister in his Budget Speech for the year
2004-05, IBA had communicated certain changes in the security norms applicable to
educational loans with limits above Rs.4 lakhs and up to Rs. 7.5 lakhs.
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2. OBJECTIVES OF THE SCHEME:
The Educational Loan Scheme outlined below aims at providing financial support from the
banking system to deserving/ meritorious students for pursuing higher education in India and
abroad. The main emphasis is that every meritorious student though poor is provided with an
opportunity to pursue education with the financial support from the banking system with
affordable terms and conditions. No deserving student is denied an opportunity to pursue
higher education for want of financial support.
3. APPLICABILITY OF THE EDUCATION LOAN::
The scheme detailed below could be adopted by all Commercial Banks. The scheme provides
broad guidelines to the banks for operational sing the educational loan scheme and the
implementing bank will have the discretion to make changes suiting to the convenience of the
students/ parents to make it more customers friendly.
 The scheme details are as under :
4. ELIGIBILITY CRITERIA:
4.1 Student eligibility :
* Should be an Indian National

* Secured admission to professional/ technical courses in India or Abroad through Entrance
Test/ Merit Based Selection process.
4.2 Courses eligible
 Studies in India: (Indicative list)
* Graduation courses: BA, B.Com., B.Sc., etc.

* Post Graduation courses : Masters & PhD.
* Professional courses : Engineering, Medical, Agriculture, Veterinary, Law, Dental,
Management, Computer etc.
* Computer certificate courses of reputed institutes accredited to Dept. of Electronics or
institutes affiliated to university.
* Courses like ICWA, CA, CFA etc.
* Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.
* Courses offered in India by reputed foreign universities.
* Evening courses of approved institutes.
* Other courses leading to diploma/ degree etc. conducted by colleges/ universities approved
by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc.
* Courses offered by National Institutes and other reputed private institutions. Banks may
have the system of appraising other institution courses depending on future prospects/
recognition by user institutions.
 Studies abroad :-
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* Graduation: For job oriented professional/ technical courses
offered by reputed universities.
* Post graduation: MCA, MBA, MS, etc.
* Courses conducted by CIMA- London, CPA in USA etc.
4.3 Expenses considered for loan :
* Fee payable to college/ school/ hostel.

* Examination/ Library/ Laboratory fee.
* Purchase of books/ equipments/ instruments/ uniforms.
* Caution deposit/ building fund/ refundable deposit supported by Institution bills/ receipts.
* 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.
5. QUANTUM OF FINANCE:
Need based finance subject to repaying capacity of the parents/ students with margin and the
following ceilings.
- Studies in India - Maximum Rs.7.50 lacs.

- Studies abroad - Maximum Rs.15 lacs
6. MARGIN :
Up to Rs 4 lacs Nil
above Rs. 4 lacs: Studies in India 5%
Studies Abroad 15%
7. SECURITY:
Up to Rs 4 lacs: No security
Above Rs.4 lacs and up to R.s.7.5 lakhs Collateral in the form of a suitable third party
guarantees. The bank may, at its discretion, waive third party guarantee if satisfied with the
net-worth / means of parent who would be executing the document as "joint borrower".
Above Rs.7.5 lakhs Collateral security of suitable value or suitable third party guarantee
along with the assignment of future income of the student for payment of instalments.
 Note:-
* The loan documents should be executed by the student and the parent/ guardian as joint-
borrower.
* The security can be in the form of land/ building/ Govt. securities/ Public Sector Bonds/
Units of UTI, NSC, KVP, LIC policy, gold, shares/ debentures, bank deposit in the name of
student/ parent/ guardian or any other third party with suitable margin.
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* Wherever the land/ building are already mortgaged, the unencumbered portion can be taken
as security on 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.
Banks who wish to support highly meritorious/ deserving students without security may
delegate such powers to a fairly higher level authority.
8. RATE OF INTEREST:
Up to Rs 4 lacs BPLR
above Rs. 4 lacs BPLR + 1%
*Simple interest to be charged during the Repayment holiday/ Moratorium period.
* Penal interest @ 2% is charged for above Rs.4 lacs for the overdue amount and overdue
period.
9. APPRAISAL / SANCTION/ DISBURSEMENT:
* In the normal course, while appraising the loan the future income prospects of the student
will be looked into. However, where required, the means of parent / guardian could also be
taken into account to evaluate re-payment capability.
* The loan to be sanctioned as per delegation of powers preferably by the Branch nearest to
the place of domicile.
* No application for educational loan received should be rejected without the concurrence of
the next higher authority.
* The loan to be disbursed in stages as per the requirement/ demand directly to the
Institutions/ Vendors of books/ equipments/ instruments to the extent possible.
10. REPAYMENT:
Repayment holiday/Moratorium Course period + 1 year or 6 months after getting job,

whichever is earlier.
 The loan to be repaid in 5-7 years after commencement of repayment.
 If the student is not able to complete the course within the scheduled time extension of
time for completion of course may be permitted for a maximum period of 2 years.
 The accrued interest during the repayment holiday period to be added to the principal
and repayment in Equated Monthly Instalments (EMI) fixed.
 1% interest concession may be provided for loanees if the interest is serviced during
the study period when repayment holiday is specified for interest/ repayment under
the scheme.
11. FOLLOW UP:
Banks to contact college/ university authorities to send the progress report at regular intervals
in respect of students who have availed loans.
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12. PROCESSING CHARGES:
No processing/ upfront charges may be collected on educational loans.
13. CAPABILITY CERTIFICATE:
Banks can also issue the capability certificate for students going abroad for higher studies.
For this financial and other supporting documents may be obtained from applicant, if
required.
(Some of the foreign universities require the students to submit a certificate from their
bankers about the sponsors' solvency/ financial capability, with a view to ensure that the
sponsors of the students going abroad for higher studies are capable of meeting the expenses
till completion of studies.)
14. OTHER CONDITIONS:
No due certificate need not be insisted upon as a pre-condition for considering educational
loan. However, banks may obtain a declaration/ an affidavit confirming that no loans are
availed from other banks.
Loan applications have to be disposed of within a period of 15 days to 1 month, but not
exceeding the time norms stipulated for disposing of loan applications under priority sector
lending.
In order to bring flexibility in terms like eligibility, margin, security norms, banks may
consider relaxation in the norms on a case to case basis delegating the powers to a fairly
higher level authority.
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EDUCATION LOAN SCHEME PROVIDED PUBLIC COMPANY
BY
STATE BANK OF INDIA
State bank of India
The State Bank of India, popularly known as SBI, is one of the leading banks in India. The
bank traces its origin to the first decade of the 19th century. Later on, it was merged with the
Imperial Bank. In the year 1955, the Government of India nationalized the Imperial Bank
along with the Reserve Bank of India. Ever since that time, the bank acquired its present
name that is SBI.
The State Bank of India is India's largest commercial bank. The bank has been striving
sincerely to adhere to the efforts of providing utmost customer satisfaction to the best
possible extent.
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 INTRODUCTION OF EDUCATION LOAN
State Bank of India provides its customers with a variety of personal banking services. SBI,
which is actively engaged in Community Services Banking, also offers education loans to
students aspiring to continue higher studies. SBI Study Loans are sanctioned only to Indian
Nationals.
 A study loan is sanctioned for studies both in India and abroad.
Courses Eligible for Education Loans:
A candidate, who applies for a program with prospects of employment, can apply for
the loan. Whether you apply for a
 Graduate,
 Professional
 Postgraduate Program
 UGC approved,
 AICTE or
 The government
Expenses taken into account:

• The student loan covers school, college or hostel fees as well as cost for buying books
and other necessary items.
• Apart from the library, exam or library fees, even caution deposit, refundable deposit
and building fund are considered for the loan.
• Other expenses, which are mandatory for completing the course, travel expense as
well as a maximum cost of Rs 50,000 for buying a 2 wheeler, are taken into account.
Quantum of Loan & Security:
An applicant is sanctioned a loan of maximum Rs 10 lacs for studying in India

and Rs 20 lacs for studying in abroad. On a loan above Rs 4 lacs, there is a
margin of 5% and 15% for studying in India and abroad respectively.
• No security is required for loan amount up to Rs 4 lacs.
• A borrower should present a 3rd party as guarantee for a loan amount above Rs 4 lacs.
However, on SBI discretion, this clause of 3rd party guarantee may be waived off in
certain cases.
• If you borrow a loan amount above Rs 7.5 lacs, you need to offer a material collateral
security and assign the future income of the student for paying instalments.
• The guardians or parents of a borrowing student should secure an education loan.
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• If the borrower is married, his or her spouse, parents-in-law or parents can act as the
co-obligator.
 Repayment of Education Loan:
The borrower can begin repaying 6 months after getting job or one year after the course is
completed, whichever happens earlier. The loan can be repaid in a period of 5 to 7 years.
 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 (maximum 10%

Tuition fees for the entire course).
 Travel Expenses/Passage money for studies abroad.
 Purchase of computers considered necessary for completion of course.
 Cost of a Two-wheeler up to Rs. 50,000.
 Any other expenses required to complete the course like study tours, project
Work etc.
 Amount of Loan
 For studies in India, maximum Rs. 10 lacs.
 For studies in India, minimum Rs.50,000
 Studies abroad, maximum Rs. 20 lacs.
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 Interest Rates
(With effect from 10.11.2008)
 For loans up to Rs.4 lacs- 0.50% below SBAR i.e.12.50% p.a. Floating.
 For loans above Rs. 4 lacs and up to Rs.7.50 lacs - 1.00% above SBAR 14.00
% Floating.

For loans above Rs.7.50 lacs - SBAR - 13.00% p.a. Floating.
 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.
 Charges::
 Pre-payment charges:: 1.00%
 Time to process loan- 1-7 days.
 Co application ----- YES
 Repayment Tenure
Repayment will commence one year after completion of course or 6 months

After securing a job, whichever is earlier?
Place of study Loan amount Repayment period in year

Study in India 10.0 lack 5-7
Study in abroad 20.0 lack 5-7
 Security
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amount For loans up to Rs. 10.00 lacs for Studies in
India and up to Rs. 20.00 lacs for studies
abroad
Up to 4 lacs No security
Above Rs. 4 Collateral security in the form of suitable third
lacs to Rs. party guarantee. The bank may, at its
7.50 lacs discretion, in exceptional cases, weave third
party guarantee if satisfied with the net-
worth/means of parent/s who would be
executing the documents as "joint borrower".
Above 7.50 lacs tangible collateral security of suitable value,
along with the assignment of future income of
the student for payment of instalments.
 Condition::
All loans should be secured by parent(s)/guardian of the student borrower. In

case of married person, co-obligator can be either spouse or the parent(s)/ parents-in-law
 Margin
 For loans up to Rs.4.0 lacs: No Margin
 For loans above Rs.4.0 lacs:
 Studies in India: 5%
 Studies Abroad: 15%
 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
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 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
EDUCATION LOAN SCHEME PROVIDED

BY
STATE BANK OF PATIALA
Bank type:: STATE BANK GROUP.
State Bank of Patiala (SBP) is a nationalized Indian bank which is a subsidiary of the State
Bank of India. Founded in 1917 by the then Maharaja His Highness Bhupinder Singh,
erstwhile Patiala, the bank was initially named Patiala State Bank. It was named as State
Bank of Patiala after it became a subsidiary of SBI. The bank was set up with the sole aim of
nurturing the growth of agriculture, trade and industry. In 1948, the bank was brought under
the control of the Reserve Bank of India or RBI. Since its inception, the State Bank of Patiala
has been constantly working towards increasing its size and the volume of business.
 EDUCATION LOAN
State bank of Patiala offers education aspiring student to help them pursue for higher studies
in India and abroad. Bank provides loan to students for graduation courses, post graduation
courses, professional courses and technical courses, courses offered by National institutes and
other reputed privates institutes. Bank has a facility of life insurance through SBI Life
Insurance Company named ‘Shield’ for student/parents/guardian at optional basis.
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 Loan for study in::
 India and
 Abroad.
 Graduation courses-B.A.,B.COM,B.SC etc
 Professional
 Post Graduation Courses—Masters and PhD.
 Computer certificate courses
 Courses like ICWA, CA, CFA, etc.
 Courses conducted by IIM, IIT, IISC, XLRI, NIFT, etc.
 Courses Eligible for study 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.
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 Security: Studies in India
 Up to Rs. 4.00 Lacs: Nil.
 Above Rs. 4.00 Lacs and up to Rs. 7.50 lakh: Collateral in the form of a suitable third
party guarantee.
 Above Rs. 7.50 lacs to 10.00 lacs: Tangible Collateral for full value of the loan.
 Studies in Abroad::
 Up to Rs. 4.00 Lacs : Nil
 Above Rs. 4.00 Lacs and up to Rs. 7.50 lakh: Collateral in the form of a suitable third
party guarantee.
 Above Rs. 7.50 lacs to 15.00 lacs: Collateral of suitable value or suitable third party
guarantee.
 Above 15.00 lacs and up to 20.00 lacs: Tangible Collateral for full value of the loan.
Repayment of Education Loan:
Repayment will commence one year after completion of course or 6 months after securing a
job. Whichever is earlier?
 The loan is repaid in 5-10 years after commencement of repayment.
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Work etc.
 Amount of Loan
 Time to process loan- 0 days.
 Co application ----- NO
 Interest Rates::
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 For loans up to Rs. 4 lakh - 12.25% (1.75 bps below BPLR).
 For loans above Rs. 4 lakh - 14% (at BPLR).
 Basically 13.50 %
 Margin
 Passport/ID CARD/VOTER card/PAN card etc. Of student/parent/guardian and

guarantor.
 Proof of income of the borrower/guarantor.
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 Proof of income of the borrower/guarantor.
 Brief statement of assets and liabilities, of the Co-borrower.
 PRIVATE BANKS EDUCATION LOAN PLAN
1) HDFC BANK EDUCATION LOAN
Housing Development Finance Corporation Limited or HDFC Bank started its operations in
the year 1995 as a scheduled commercial bank. It is one of the Indian banks, which offer
education loans to students willing to pursue higher education in India or abroad. Scroll down
the page to learn more about HDFC Bank education loans.
 Candidates Eligibility Required for Education Loan
Candidates willing to apply for HDFC Bank education loan should be Indian Nationals.
Applicants should be between 16-35 years of age. Collateral security is essential for loans
above Rs. 7.5 lacs. A co-applicant is required if you are applying for full time courses.
 Graduate,
 Professional
 Post Graduate Program- management, engineering, medicine, computer

applications, fine arts and designing, hotel and hospitality, architecture and
pure science.
 UGC approved,
 Distance learning programs
 Air hostess training courses
 AICTE or
 The government
 Others like- SAP, GNIIT and ERP.
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 Features and Benefits offered by HDFC Bank
 The maximum amount of loan granted for education in India is Rs.15 lacs and Rs. 20
lacs for education in abroad. The rate of interest offered is attractive.
 Repayment of loan commences either one year after the course ends or six months
after one gets a job. It depends on which one is earlier to the other.
 Tenure of seven years is available for the loans and the customers also get tax benefit.
 The entire procedure is hassle free and approvals are given at the earliest.
 Loan available up to tenure of 7 years including moratorium period.
 Loans available for short duration/ job oriented courses also.
 Candidates may also fill and submit the online application form available. The
representatives of the bank get in touch with the applicants as soon as possible.
 The expenses covered by HDFC Bank education loan includes money to be paid as
college and hostel charges, examination fees, library and laboratory fees, refundable
deposit, caution deposit and other charges.
 The loan also covers travel expenses for studying abroad, essential articles
required for completing the course and other educational costs.
 Interest rates::
Interest rate: 14%

Charges for late payment of EMI: @ 24 % p.a. on amount outstanding from date of default.
 Margin
Study abroad margin will be 15%
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Study India margin will be 5%
 Special privileges.
 Service At Your Door Step
 Loans disbursed directly to the educational institution as Per the Fee Schedule.
 Insurance Protection from HDFC ERGO.
 Gateway To Other Banking Products And Services.
 Savings Account
 Smooth repayment:
Our Equated Monthly Instalments (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).
Fees & Charges for Educational Loan
Description of Charges Education Loan

Loan Processing Charges Up to a maximum 2% of the loan amount
Prepayment (up to 6 months of repayment ) No pre-payment permitted
Pre-payment charges (after 6 months of
Up to 4% of the Principal Outstanding
repayment)
No Due Certificate / No Objection
Nil
Certificate (NOC)
Solvency Certificate Not applicable
@ 24 % p.a. on amount outstanding from
Charges for late payment of EMI
date of default
Credit assessment charges Not applicable
Non standard repayment charges Not applicable
Cheque swapping charges Up to Rs. 500/- per event
Loan Re-Booking / Re-Schedulement Up to Rs. 1000/-
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Charges
Bounce Cheque Charges Up to Rs. 450/- per Bouncing
Legal / incidental charges At actual
Stamp Duty & other statutory charges As per applicable laws of the state
 Security::
 Unsecured Lending Up to 15 Lakhs-No Third Party Guarantee Or Collateral

Required.
 Loans above INR 15 Lakhs will be secured by adequate collateral.
 Residential Property.
 HDFC Bank Fixed Deposit
 LIC/KVP/NSC
 Loan Eligibility Based on Applicant Last Drawn Salary or Co-Applicant Income or

combination of both.
 Loan Tenure Up to 72 Months Including 15 Months of Moratorium.

Important Document, Lien on Certificate and Transcripts.
 Documentation
Category Applicant (Student) Co-Applicant

Institute Admission Letter with
Academic Not Applicable
Fee break-up
SSC,HSC,Graduation Mark
Not Applicable
sheets
KYC(Know Your
Age Proof Age Proof
Customer)
Signature Proof Signature Proof
Identity Proof Identity Proof
Residence Proof Residence Proof
Income Documents Not Applicable Salaried
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Latest 2 Salary Slips carrying date
of joining details
Latest 6 Month Bank statement
where Salary is credited
Not Applicable Self Employed
Last 2 Year ITR with
Computation of Income
Last 2 Years Audited Income
Balance Sheet / P& L
Last 6 Month Bank statement
Proof of Turnover (Latest Sales /
Service Tax Return)
Not Applicable Self Employed - Professional
Last 2 Year ITR with
Computation of Income
Last 2 Years Audited Income
Balance Sheet / P& L
Last 6 Month Bank statement
Proof of Qualification
Others Completed Application Form Completed Application Form
Latest Photograph (Signed Latest Photograph (Signed
Across) Across)
If the appointment letter does 'not mention the date of Joining details, then co-applicant has to
submit appointment letter of the current employer.
Proof of continuity from previous employer is required if the co-applicant is in the current job
for less than 1 year at the time of loan application
Documentation ( Post Sanction )
Is there any documentation required post the sanction of the loan ?
Category Applicant ( Student ) Co-Applicant
Completed Loan Agreement to be Signed by Applicant and Co-
applicant *
SI/ECS Mandate As Applicable
Post Dated Security Cheques
A) HDFC Bank Standing
Instructions (S.I) - 3 Cheques
B) Non HDFC Bank ECS-7
Cheques
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* Stamp duty to be paid by the customer as per the relevant state laws.
1) AXIS BANK EDUCATION LOAN
Axis Bank, previously known as UTI Bank, is one of the Big Four Banks of India along with
State Bank of India, HDFC Bank and ICICI Bank. Established in 1994, it's the first of the
new private sector banks in India to start its operations, when Government of India opened
the gate for the private banks to flock into the Indian financial market. Though the bank
started its operation with the name UTI Bank, but later, in order to avoid ambiguities and
confusion with other discrete entities carrying the same name, it changed its name to its
current form (Axis Bank) in April 2007.
Axis Bank Limited recorded a total income of Rs. 13,745.04 crore as on the year ended
March 31, 2009. It also made a net profit of Rs. 1,812.93 crore in the same financial year.
 EDUCATION LOAN ::
Higher education within your reach

Axis Bank's Study Power aims to provide financial support to deserving students for pursuing
higher professional or technical education in India and abroad. The loan would be provided to
students who have obtained admission to career-oriented courses e.g., medicine, engineering,
management etc., either at the graduate or post-graduate level.
 Quantum of Loan
The quantum of finance under the scheme is capped at Rs 10.00 lacs for studies in India and
Rs 20.00 lacs for studies abroad, which would cover tuition fees, hostel charges (if any), cost
of books, etc. The minimum amount of loan would be Rs 50,000.
 Role of the Guardian
The parent(s) or guardian of the student would be treated as a co-applicant of the loan. His or
her role would be, necessarily, like the primary debtor.
 Security
L.P.U Page 25
Third party guarantee and/or collateral security may be asked for in appropriate cases.
 Additional Security
Assignment of LIC policy in favour of the Bank for the sum assured being at least 100% of
the loan amount. The policy is kept alive during the currency of the loan. To ensure this, the
annual premium may be included in the computation of the loan requirement, along with the
tuition fees and other recurring charges. Further, the future income of the student needs to be
assigned in favour of the Bank for meeting the instalment obligations.
 Disbursement
The loan will be disbursed in full or in suitable instalments taking into account the
requirement of funds and/or fee schedule as assessed by the Bank directly to the educational
institution or vendor of books or equipment or instruments.
 Interest Rates & Charges
 Margin
L.P.U Page 26
Comparison of education loan Public and Private banks::
STUDY IN INDIA::
 FOR GRATUATION ::
BANK Rate Eligibility Min.loan Max.loan Margin Min. Max.tenure

(%) (Rs) (Rs) Money(%) Tenure(yr.) (yr.)
State 12.75 16-55 yr. 50000.00 100000.00 1 7
bank of
India
State 13.50 50000.00 400000.00
bank of
Patiala
HDFC 14.00 16-30yr. 50000.00 1500000.0 5.00 1 7
0
Axis 15.75 16-30yr. 50000.00 100000.00 1 7
bank
L.P.U Page 27
COMPARE MY COMPETATIVE EDUCATION PLAN TO EXISTING PUBLIC AND
PRIVATE BANK’S EDUCATION PLAN
 FEATURE OF MY COMPETATIVE EDUCATION LOAN

PRODUCT::
Provide LOAN FOR ::
 Study in India
 Study in abroad.
 Graduation courses- B.A.,B.COM,B.SC etc
 Professional
 Postgraduate Program-- Masters and PhD
 UGC approved,
 Computer certificate courses
 Courses like ICWA, CA, CFA, etc.
 Courses conducted by IIM, IIT, IISC, XLRI, NIFT, etc.
 Distance learning programs
 Air hostess training courses
 AICTE or
L.P.U Page 28
 The government
 Others like- SAP, GNIIT and ERP.
 Courses Eligible for study 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.

Work etc.
 Amount of Loan
L.P.U Page 29
 Co application ----- YES

• No security is required for loan amount up to Rs 4 lacs.
• A borrower should present a 3rd party as guarantee for a loan amount above Rs 4 lacs.
However, on SBI discretion, this clause of 3rd party guarantee may be waived off in
certain cases.
• If you borrow a loan amount above Rs 7.5 lacs, you need to offer a material collateral
security and assign the future income of the student for paying instalments.
• The guardians or parents of a borrowing student should secure an education loan.
• If the borrower is married, his or her spouse, parents-in-law or parents can act as the
co-obligator.
 Repayment of Education Loan:
The borrower can begin repaying 6 months after getting job or one year after the course is
completed, whichever happens earlier.
 The loan can be repaid in a period of 5-20 YEARS.
 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.
L.P.U Page 30
 Repayment Tenure
Repayment will commence one year after completion of course or 6 months

After securing a job, whichever is earlier?
Place of study Loan amount Repayment period in year

Study in India 19.0 lack 5-10
Study in abroad 20.0 lack 5-20
 Security
amount For loans up to Rs. 19.00 lacs for Studies in

India and up to Rs. 20.00 lacs for studies
abroad
Up to 4 lacs No security
Above Rs. 4 Collateral security in the form of suitable third
lacs to Rs. party guarantee. The bank may, at its
7.50 lacs discretion, in exceptional cases, weave third
party guarantee if satisfied with the net-
worth/means of parent/s who would be
executing the documents as "joint borrower".
Above 7.50 lacs tangible collateral security of suitable value,
along with the assignment of future income of
the student for payment of instalments.
 Condition::
All loans should be secured by parent(s)/guardian of the student borrower. In

case of married person, co-obligator can be either spouse or the parent(s)/ parents-in-law
L.P.U Page 31
 Margin
L.P.U Page 32
FEATURES OF MY PRODUCT IS BEETER THAN AS WE
COMPARE WITH 2 PUBLIC AND 2 PRIVATE BANKS.
Comparison of education loan Public and Private banks::
STUDY IN INDIA::
 FOR GRATUATION ::
BANK Rate Eligibility Min.loan Max.loan Margin Min. Max.tenure

(%) (Rs) (Rs) Money(%) Tenure(yr.) (yr.)
State 12.75 16-55 yr. 50000.00 100000.00 1 7
bank of
India
State 13.50 50000.00 400000.00
bank of
Patiala
HDFC 14.00 16-30yr. 50000.00 1500000.0 5.00 1 7
0
Axis 15.75 16-30yr. 50000.00 100000.00 1 7
bank
 MY BANK
My 12.25 % Above 50000.00 1900000.0 1yr. 20 yr.

bank 16 yr -60 0
yr
 Another benefits::
 Eligibility above age of 16 year up to 60 year.
 Provide loan for all type of education and course.
 Amount large amount of loan is provided for education so that person can done
his graduation and also get interest on the amount for post graduation.
L.P.U Page 33
 Interest rate:: 12.25 % which is less as compare to another banks.
 The loan can be repaid in a period of 5-20 YEARS.
 No processing fee/ upfront charges.
 Co application ----- YES.
 ADVANTADES OF EDUCATION LOAN::
 HELPS you complete your objective and achieve financial freedom, you can pay back
them easily.
 Student loans are great alternatives as compared to conventional loans.
 Offer lucrative interest rates but also have easier terms and conditions.
 No security up to 4 lacs.
 Income tax saving
 The borrower is not required to repay the loans while studying as the re-payment
process commences after completion of the said course and attaining a job within a
stipulated span of time.
DISADVANTAGES::
 Most of banks doing this for increase their profit ability.
 Students get trapped in the web of unsuitable education loans due to lack of proper
knowledge and understanding about the loan procedures and banks’ terms and
conditions.
 Complex procedure.
L.P.U Page 34
 High risk.
 Some times unmanageably situation for borrowers.
 Hidden charges
References and bibliography........................
 http://www.cbseguess.com/education/educational_loans/
 http://www.sbi.co.in/
 www.sbp.co.in
 http://www.indiaedu.com/education-loans-india/
 http://www.worldcolleges.info/loan.php
 http://www.worldcolleges.info/statebankofindia.php
 http://www.worldcolleges.info/statebankofpatiala.php
 http://www.worldcolleges.info/hsbcbank.php
 http://www.worldcolleges.info/loan.php
 http://www.indiaedu.com/education-loans-india/hdfc-bank.html
 http://www.educationloannetwork.com/faq.html
 http://www.axisbank.com/personal/loans/studypower/Education-Loan.asp
L.P.U Page 35

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Topic ::- Develop a competitive Product of Education Loan

Mr. Lalit K. Bhardhvaj

Lovely Professional University

COURSE INSTRUCTOR : Mr. Lalit K. Bhardhvaj

I declare that this assignment is my individual work. I have

Student’s Signature: POONAM VERMA.

Name –Poonam Verma

 Introduction OF EDUCATION LOAN.

3. APPLICABILITY OF THE EDUCATION LOAN::

 The scheme details are as under :

4.1 Student eligibility :

* Should be an Indian National

4.2 Courses eligible

 Studies in India: (Indicative list)

* Graduation courses: BA, B.Com., B.Sc., etc.

4.3 Expenses considered for loan :

* Fee payable to college/ school/ hostel.

- Studies in India - Maximum Rs.7.50 lacs.

*Simple interest to be charged during the Repayment holiday/ Moratorium period.

9. APPRAISAL / SANCTION/ DISBURSEMENT:

Repayment holiday/Moratorium Course period + 1 year or 6 months after getting job,

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

11. FOLLOW UP:

No processing/ upfront charges may be collected on educational loans.

13. CAPABILITY CERTIFICATE:

14. OTHER CONDITIONS:

State bank of India

 A study loan is sanctioned for studies both in India and abroad.

Courses Eligible for Education Loans:

Expenses taken into account:

Quantum of Loan & Security:

An applicant is sanctioned a loan of maximum Rs 10 lacs for studying in India

 Repayment of Education Loan:

 Expenses considered for loan

 Fees payable to college/school/hostel.

 Caution Deposit/Building Fund/Refundable Deposit (maximum 10%

 Travel Expenses/Passage money for studies abroad.

 Purchase of computers considered necessary for completion of course.

 Cost of a Two-wheeler up to Rs. 50,000.

 For studies in India, maximum Rs. 10 lacs.

 For studies in India, minimum Rs.50,000

 Studies abroad, maximum Rs. 20 lacs.

 No processing fee/ upfront charges

 Pre-payment charges:: 1.00%

 Time to process loan- 1-7 days.

 Co application ----- YES

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

Place of study Loan amount Repayment period in year

All loans should be secured by parent(s)/guardian of the student borrower. In

 For loans up to Rs.4.0 lacs: No Margin

 For loans above Rs.4.0 lacs:

 Studies Abroad: 15%

 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

 Income tax assessment order, of last 2 years

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

EDUCATION LOAN SCHEME PROVIDED

Bank type:: STATE BANK GROUP.