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A PROJECT REPORT

ON
STUDY OF EDUCATION
LOAN

SUBJECT ( EDUCATION LOAN )


AT
INCRED MANAGEMENT & TECHNOLOGY
SERVICES PRIVATE LIMITED
BATCH 2017 -2019

SARVOTTAM INSTITUTE OF TECHNOLOGY


& MANAGEMENT
NOIDA (U.P)

FACULTY OF MANAGEMENT
YEAR - 2017 – 2019
ACKNOWLEDGEMENT

Project development is not an easy task. It requires corporation and help of various people.
It always happens that word run out when we are really thankful and sincerely want to
inspire my feeling of gratitude towards the one when helped in the completion of the
project. First my grateful thank to Mr.Chakshu Gupta (Assistant Professor), Sarvottam
Institute Of Technology & Management, NOIDA (U.P) for the golden opportunity. Today
after completing my project work, I am immensely satisfied. There were many times during
the span of making the project when the clock beats you to learn out of energy and you just
want to finish at forever.
DECLARATION

I Avishek kumar Student of “EDUCATION LOAN” 2nd semester of Sarvottam Institute


Of Technology & Management , Noida (U.P) hereby declare that the project Report
entitled “ Recruitment and selection process with special reference to a team “
INCRED MANAGEMENT & TECHNOLOGY SERVICES PRIVATE LIMITED“ undertaken
by me . I Also declare that this report has not been submitted to any university /
Institute for the award of any degree or any professional diploma .

DATE: 18.10.2017 AVISHEK KUMAR

PLACE: NOIDA (U.P) (2nd sem,EDUCATION LOAN)

Roll no. 1665470005


CONTENT

CHAPTER NO. TOPIC PAGENO.

CHAPTER 1 INTRODUCTION OF THE


TOPIC
1-10
CHAPTER 2 INTRODUCTION OF THE
COMPANY
11-13
CHAPTER 3 OBJECTIVE OF THE
STUDY
14-16
CHAPTER 4 VISION & MISSION
17
CHAPTER 5 NEED & SCOPE OF
STUDY
18-20
CHAPTER 6 RESEARCH METHODOLOGY

21-23
CHAPTER 7 DATA ANALYSIS &
INTERPRETATION
24-27
CHAPTER 8 REVIEW OF LITERATURE

28
CHAPTER 9 FINDING SUGGESTIONS

29-30
CHAPTER 10 ADVANTAGES &
DISADVANTAGES
31-32
CHAPTER 11 SUMMARY & CONCLUSION

33
CHAPTER 12 BIBLIOGRAPHY

34-36
CHAPTER 13 ANNEXURE

37-46
CHAPTER.1

INTRODUCTION

Technology and scientific innovations have changed the way companies do


business.Education is one area which is evolvingconstantly to keep pace with the needs of
the marketplace.Students have a wide range of choices available and it is not alwayscheap
to get the right degree.Students who are looking to get advanced degrees have to resort to
applying for student education loans – dealing with education lending institutions is a
must.Schools loans are the only way for students to get the qualifications they need – most
don’t have enough resources to cover their bills.Lending rates play a big role in the total
amount of a loan as well.

Keeping this fact in mind, the banks,education lending institutes, and India financing
services have come up with affordable ways to keep the lending rate on loans to the
students comparatively lower than what one would have to pay for other kinds of loans. The
good news is that a lot of institutions have started offering information online about their
loan facilities – all that a prospective applicant has to do is to fill out an application form and
wait for a bank representative to call.Students can talk to different lenders and find out
which one offers the best loans. Once they choose an institution, they have to send in the
relevant paperwork and wait for the information to be processed. After the verification
process is completed, students will be provided with a bank educational loan letter, which
states that school loans amount has been sanctioned.

There are many tips available at BankandFinance.com that will help you plan and research
information on various banks. Getting educated by checking out the different tips, benefits
and features on how to pay for college is the best way to get the right loan.

Benefits and Facts about School Loans:

 School Loans help pay the fees to the educational institution in order to acquire
higher education in India or overseas.
 The applicant can claim the deductions from the taxable income under the section of
80 E.
 There are many education lending companies and banks which require students to
repay the principal amount only after graduating and finding a steady job.
 If the student loan amount is less than Rs. 4 lakhs, then there is no need to provide
any security. If the Student Education Loan is more than Rs. 4 lakhs, banks will ask
for collateral to secure the loan.

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 Bank educational loan is easy and simple process, if the applicant gets admission to a
recognized university or college. The student will have to produce the admission
letter to the bank. After verifying documents, the bank will transfer the student loan
amount to the institute or college to cover expenses like tuition fees,hostel fees,
books, travel and meals etc.
 Student Education Loan gives students the flexibility/option to repay the bank
educational loan after finishing the courses within period of time according to their
convenience – a period of 12 – 24 months depending on the lender. This period of
time is a time when a graduate student is in the process of looking for the right
position.
 Loans calculators options on websites are a good way to find out the monthly
installments to be repaid.
 Student credit cards give people the flexibility to repay their bank educational
loan.Nowadays,it is very important for people to apply for credit cards even if one is
in college.This will benefit students by establishing credit history.

FEATURES OF EDUCATION LOAN

With the cost of higher education increasing by leaps and bounds, many students take
education loan from different banks of India. This article discusses the basic features of
educational loan being offered by the public sector/private sector banks. Knowledge of
these features would enable the students applying for education loan to bargain hard with
the loan-offering banks.

Education, especially higher education, is becoming more and more costly with the passage
of time. As a result, even middle class Indian parents have to go for education loan to meet
the expenditures associated with higher education in India and abroad. So, it is absolutely
necessary for all of us to know the basic features of education loan in India. In this article,
we will discuss the features and eligibility conditions of education loan sanctioned by
different banks (both public sector and private sector) in India.

ELIGIBILITY CRITERIA

 The applicant student should be Indian National.

 He/She should have secured admission for higher education course in recognized
institutions in India or abroad through entrance test. But if the admission is not
based on entrance test marks, then the banks are free to adopt the criteria of
employability and reputation of the educational institution where the student is
going to take admission.

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 Banks will consider meritorious students for this loan even if such students get
admission under management quota.

COURSES ELIGIBLE

(I) Courses in India

 Approved courses leading to Graduate / Post Graduate degree and PG diplomas


conducted by recognised colleges or universities recognised by UGC/ Govt./ AICTE,
etc.
 Courses 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/
iploma in nursing or any other discipline approved by Director General of Civil
Aviation/ Shipping/ Indian Nursing Council or any other regulatory body.

(II) Courses abroad

Graduation- Job oriented professional/technical courses offered by reputed universities


Post Graduation – MCA, MBA, MS, etc.
Courses conducted by Institutes like CIMA (London), CPA (USA), etc.

Degree/diploma courses like aeronautical, pilot training, shipping etc provided these
courses are recognized by competent regulatory bodies in India/abroad for the purpose of
employment in India/ abroad.

ELIGIBLE EXPENSES FOR LOAN

The following types of fees are considered for grant of education loan:

 Fee payable to educational institutes.


 Examination/ Library/ Laboratory fee.
 Travel expenses/ passage money for studies abroad.
 Insurance premium for student borrower, if applicable.
 Caution deposit, Building fund/ refundable deposit supported by Institution bills/
receipts (total expense should not exceed 10% of total loan).

3
 Purchase of books/ equipments/ instruments/ uniforms (total expense should not
exceed 20% of the total loan)
 Any other expense required to complete the course; like study tours, project work,
thesis, etc. (In such cases, total expense should not exceed 20% of total loan).
 While computing loan required, scholarships, fee waiver etc., if any, will be taken
into account.

MAXIMUM LOAN AVAILABLE

 Studies in India – Maximum Rs. 10,00,000/-


 Studies abroad – Maximum Rs. 20,00,000/-

The above are the ceilings fixed by RBI. But the banks are free to re-consider this limit if the
course fees are higher than these limits (like course fees of IIMs, ISB, etc.)

SECURITY

In some cases of education loan, security is not required. Upto a loan of Rs. 4 lakh, parents
of the students need to be joint borrower. In this case security is not required. However, for
education loan amounting to above Rs. 4 lakh, the applicant needs to bring collateral
security in the forum of third party guarantee. However, if the loan-approving bank is
satisfied with the financial condition of the borrower, then there is a provision of waiver of
third party collateral.

4
RATE OF INTEREST

The interest rate on the education loan will be charged at the rates linked to the base rate
of the banks. Simple rate of interest will be applicable till the period of study and
commencement of repayment. But after this period, the extended interest along with the
original principal will be considered as principal for the purpose of calculating EMI.

TENURE OF REPAYMENT

In case of loans up to Rs. 7.50 lakh the maximum tenure is 10 years. For educational loan
above Rs. 7.50 lakh the maximum tenure is 15 years. There is no penalty on early repayment
of loan.

LOAN APPROVAL

The applicant is required to apply for education loan either in physical mode or through
online mode. Loan is sanctioned or rejected within 15 days after the relevant documents are
submitted along with the application.

5
OTHER FEATURES

 Banks may issue financial capability certificate based on the financial condition of the
student, which is required while studying abroad.
 Existence of education loan may affect other student's loan availability within the
same family.
 No age restriction is there to avail education loan.
 Top-up loan will be available if further study commences during the moratorium
period. Repayment will commerce after completion of the further study.
 Usually parents or guardian will be joint borrower. But in case of married student,
either the spouse or parents/ parents-in-law may be the joint borrower.

CONCLUDING COMMENTS

Every student (along with his/her guardians/parents) who is going to apply for educational
loan, must know the aforestated basic features of education loan. Knowing these basic facts
would enable the students to negotiate with the bank(s) more effectively.

6
Generally, banks offer loans for following different courses in India or abroad

INTEREST OF SOME BANK :

7
HOLIDAY PERIOD

A holiday period is the maximum time given to the student before he/she needs to start
paying back the principal loan in Equated Monthly Instalments (EMIs). In other words, it is
the period between the student's final examination in the course for which the loan was
availed and when he/she actually starts paying the EMIs. Typically, holiday periods range
from six to 12 months. Take note, however, that if the student starts working immediately
after completing the course, he does not enjoy a holiday period. Repayment usually starts
six months after the course completion or the commencement of a job, whichever is earlier.

EDUCATION LOAN FOR PAYMENT SEAT’S

one can get an educational loan for payment seats too. Usually, the banks have a ceiling for
each course, and, based on that, they decide the loan amount. So long as the loan amount
does not cross that ceiling, the student can be assured a loan, provided he/she satisfies the
other eligibility criteria.

Processing Charges

No processing/ upfront charges may be collected on educational loans for studies in India.

Other Conditions

a. Meritorious Students
Banks which wish to support highly and exceptionally meritorious/ deserving students
without security may delegate such powers to a fairly higher level authority. b. Multiple
Loans
In case of receipt of application for more than one loan for student borrower from a family,
the 'family' as a unit has to be taken into account for considering the loan and security taken

8
in relation to the total quantum of finance disbursed, subject to margin and repaying
capacity of the parent/student. c. Minimum Age
There is no specific restriction with regard to the age of the student to be eligible for
education loan.

d. Change of Address

In cases of student staying with parents and where such parents have transferable jobs or
there is change in address, the bank may provide in the system of noting the "address for
correspondence" for tracking purpose.

e. Top up loans

Banks may consider top up loans to students pursuing further studies within the overall
eligibility limit, with appropriate re-schedulement, subject to taking required security.

f. Co-obligator

The co-obligator should be 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.

No Due Certificate

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.

Disposal of Applications

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.

9
Flexibility in terms

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.

Tax benefits

Deduction is available under section 80E of Income Tax Act for any amount paid in the
previous year by an assessee out of his income chargeable to tax, by way of interest on loan
taken by him from any financial institution or any approved charitable institution for the
purpose of pursuing his higher education or for the purpose of higher education of his
relative (spouse and children).

10
CHAPTER.2

INTRODUCTION OF THE COMPANY

INCRED MANAGEMENT AND TECHNOLOGY SERVICES

PRIVATE LIMITED

OVERVIEW:

 INCRED MANAGEMENT AND TECHNOLOGY SERVICES PRIVATE LIMITED is a Private


Company limited by Shares. It is registered with Registrar of Companies, Mumbai on
Feb 17, 2016.

 Current Status of Incred Management And Technology Services Private Limited is


Active.

 It is a Non-govt company with an Authorized Capital of ₹ 5,00,00,000 (Five Crore


Indian Rupees) and Paid Up Capital of ₹ 4,90,00,000 (Four Crore And Ninety Lakh
Indian Rupees).

 There are 2 Directors associated with Incred Management And Technology Services
Private Limited. They are: Nitin Agarwal and Bhupinder Singh.

 Corporate Identification Number (CIN) of Incred Management And Technology


Services Private Limited is U72900MH2016PTC273211 and its Registration Number is
273211. Its Registered Address and Contact Email are 'Unit No. 1502-A, 15th Floor,
The Capital Building, c-70, G Block Bandra Kurla Complex, Bandra (East) Mumbai
Mumbai City MH 400051 IN' and bhupinder.singh@bee-fin.com respectively.

11
COMPANY DETAILS :

`CONTACT INFORMATION:

EMAIL ID : bhupinder.singh@bee-fin.com

Registered Office Address : Unit No. 1502-A, 15th Floor, The Capital Building, c-70,
G Block Bandra Kurla Complex, Bandra (East) Mumbai
Mumbai City MH 400051 IN

12
WHY CHOOSE InCred :

 No Hidden Charges

 Quick Loans (Before Visa,Admissions & I20)

 700+ Eligible Universities

 200+ Eligible Programs

 Quick Online Process

 Collateral Free Loans upto Rs. 40 lakhs

 Flexible Repayment Tenure

 Loans upto Rs 1.5 Crores Available

13
CHAPTER.3

OBJECTIVE OF THE STUDY

In order to find out the solution to the problem raised the present study has carried out
with the following objectives.

 To ascertain the procedure for sanctioning an educational loan.

 To ascertain the level of satisfaction about the educational loan scheme and
procedure among students who have obtained the loan.

 To identity the factors influencing the level of satisfaction To suggest suitable


measure for improving the level of satisfaction among students.

Canara Bank

Education Loan : CANEDU Loan is a Canara Bank Loan for Meritorious Students who
wants to continue education in India or Abroad.

State Bank of India (SBI)

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

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HYPOTHESIS

The following hypotheses have been framed and tested in the study.

1. There exist no association between age and the level of satisfaction.

2. There exist no association between sex and the level of satisfaction.

3. There exist no association between Nature of residence and level of satisfaction.

4. There exist no association between educational qualification and level of satisfaction.

5. There exist no association between monthly in come of respondent father and level of
satisfaction.

6. There exist no association between the strength of the respondents and level of
satisfaction.

7. There exist no association between occupation of the father respondents and level of
satisfaction.

8. There exist association between educational qualification of the fathers respondents and
level of satisfaction.

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scheme

The Educational Loan Scheme 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.

RBI GUIDELINES PROVIDED WITH RESPECT TO THE MODEL EDUCATION LOAN


SCHEME:

The Model Educational Loan Scheme introduced by Reserve Bank of India could be adopted
by all Commercial Banks. The scheme provides broad guidelines to the banks for
operationalising the educational loan scheme. The implementing bank will have the
discretion to make changes suiting to the convenience of the students/parents in order to
make it more customer friendly.

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CHAPTER.4

VISION & MISSION

IAEC Consultants Pvt Ltd has been established in the year 2000 with the objective of
providing end to end services for students aspiring to pursue higher education in countries
like USA, UK, Australia, Canada & New Zealand. Our clientele group mainly consists of
undergraduate, graduate and PhD aspiring students. We help the student identify the right
university and the right program. Our company also provides training for pre-requisite tests
like GRE, GMAT, SAT, TOEFL, IELTS & PTE. We also help the university identify the right
student. We attract students from all over Indian Subcontinent. Our mission is to place
students in the right country, the right university and the right program thereby helping
students to pursue his/her dream career and to emerge as a pan India player in the Arena of
global education and training.

The focus is on continuous up-gradation of the following four fundamentals – knowledge,


care and concern for students, problem solving skills and timeliness. This is permeated into
the entire structure and all the processes of the company and hence gets translated into
generating Confidence, Comfort, Hope and Satisfaction to the student.

Ethical Recruitment Policy (ERP): We have resolved that the recruitment into a
course/university is solely based on student academic priorities and budgetary preferences
with proper explanation of career choices available.

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CHAPTER.5

NEED OF STUDY:

There has been increasing recognition in all parts of the world including India of the need to
have adequate access at affordable cost to good quality higher education for all eligible
members of the society. It is reveal that universal higher education of high quality requires
mindboggling resources. Higher education in India, like in many other developing countries,
has not been inclusive of poorer sections of society especially from the rural areas. It is a
matter of concern that the problem of finance is a major constraint for a significant section of
students to pursue higher education. Among the major countries, India has one of the
lowest proportions of young persons in the relevant age group who pursue higher
education. Recent studies indicate the need for non-government sources of funds for higher
education. In this context, there is an urgent need for enhanced use of education loan to
augment resources for higher education within an appropriate framework of inclusiveness.

SCOPE OF STUDY:

With the cost of various professional courses going up rapidly, the demand for educational
loans has gone up substantially in the recent times. Bhupinder singh, chief executive officer
of incred management & technology services private limited, a subsidiary of HDFC that is
exclusively focused on education loans, in an interview to FE's Sitanshu Swain, says there is
a huge scope for innovation in education loans, such as offering mid-course funding and
funding for shorter terms. He also says that lenders must understand the quality of the
course and institute and also the student's potential employability, which are vital for the
quality of the loan portfolio. Excerpts:
How do you see the growth of the education loan industry in the country
The education loan industry is growing and the current outstanding of education loan is
about R43,000 crore. Apart from banks, Credila is the only specialised player in the
educational loan market. What banks are offering is the very basic product, which has been
in existence for around eight years now. So, there is a lot of scope for innovation like
offering mid-course funding and funding for shorter terms. No doubt, the pace needs to

18
catch up with the rate of growth in the cost of education and education sector supply. That
means a lot of talented Indian students (and their parents) may increasingly find it difficult
to afford the education on their own. At the same time, institutes are also facing the
challenge of attracting talented students who can afford the higher fees and living expenses.
Similarly, for lenders, understanding the quality of the course and institute and also the
student's potential employability are vital for the quality of the portfolio. These issues make
the perceived risks relatively much higher for a normal lender. Therefore, there is a need for
specialised players in the education loan industry who not only understand the changing
needs of Indian students, but are also able to evaluate the quality of the course, institute
and employability more scientifically. Moreover, the innovation in products and processes
to make it hassle-free for people availing these loans is going to be the game changer.
Which segment students taking admission abroad or in India is growing faster
As we know, being one of the youngest countries in the world means that the pool of Indian
students aspiring for higher education is also one of the largest across the globe. One of the
estimates indicate that India will have over 25 million students in the higher education
system alone in next 2-3 years.
Our capacity to accommodate these large numbers will take a longer time to get built. Thus,
we will continue seeing exponential growth in both segments. The only limitations for Indian
students going abroad are visa caps and high costs.
How do you differentiate your style of doing the business from banks What is the maximum
loan you can give and for what tenure
We are different from banks in many ways. First of all, we specialise in education loans only.
So, unlike banks that have to manage the entire suite of liabilities and asset products and
processes, Credila's entire focus is only on doing a lot of research to understand the exact
challenges Indian families, institutes and lenders are facing. This enables us to come up with
new products and processes that suit the changing needs of all stakeholders. Education loan
is a seasonal business and a sudden surge in applications during the admission time makes it
challenging for banks to ensure that students are given the decision on their applications
before they have to pay the fees.
Credila accepts lower loan security or collateral value for higher amounts of loans for
deserving applicants. We are the first in offering over R20 lakh education loans as well as up
to 10 years of repayment tenures.

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Are you competitive in terms of rates than the banks

Yes, we are extremely competitive in terms of rates with banks. Over and above the other
features like flexible co-borrowers and collateral terms, we offer loans for longer tenures
and loans amount over R20 lakh to the students and parents at similar rates.
How you are ensuring prevention of non-performing assets (NPAs) in your portfolio
Our superior underwriting capabilities based on strong research of educational institutes,
courses, potential employability and compensation along with even cross-border tracking
and collection abilities ensure that our portfolio quality is maintained at highest levels.
Entrenched relationship with institutes and continuous engagement with students and
parents also helps to keep NPAs under control.
There is a possibility of ratings for educational institutes for educational loans. What is your
take on that
Yes, there is a need to improve the scope, objectives and delivering unbiased and quality
rankings of educational institutes that can be used not only by the students, but also by
lenders and other stakeholders of the ecosystem.
What are your expansion plans
Credila has financed the dreams of thousands of Indian students across 38 countries and
over 1,000 universities, including large numbers in India. We would like to continue our
journey to become the most preferred option of Indian students for education finance
solutions.

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CHAPTER.6

RESEARCH METHODOLOGY

\The present study is concerned with Education loan provided by Indian Banks in general
and State Bank of India in particular hence mainly based on Primary sources of data as well
as on Secondary data. Secondary data is collected from the Annual Report published by
various Commercial Banks and State Bank of India, RBI Bulletin, Research Articles published
in national and international journals, References books, various libraries, Government and
NGOs Websites, etc.

As far the primary data is concerned the structured questionnaire is prepare. The prepared
questionnaires were filling up from selected sample respondents; therefore the answer
given by them have been the basis of the qualitative analysis. The information collected by
the respondents is analyzed in Tables and Graphs with the help of simple statistical tools.
Also discussion is made with the responsible bank officers, managers, etc. 250 sample
respondents (Borrowers) is selected by purposive sampling technique from the borrowers
list provided by District Head office of State Bank of India from the selected Districts of
Maharashtra State; who avails education loan facilities from State Bank of India and also to
take the interview of 10 bank officers from the State. 250 sample respondents’ borrowers is
selected on random basis from the 10 selected districts viz. Aurangabad, Nanded, Amravati,
Nagpur, Solapur, Pune, Kolhapur, Nashik, Jalgaon and Raigad of Maharashtra State. The data
used in this study was collected from primary sources through structured questionnaire
based on fieldwork conducted during March to May 2013. The detailed procedure of
selection of samples is displayed in Table No.

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Selection Procedure of Sample Respondents

Total population size for this research is 250 respondents to whom the education loan was
sanctioned and disbursed. These 250 sample respondents were selected from the 10
districts of Maharashtra State. Total 31,490 cases were sanctioned and disbursed by SBI
branches in the selected districts. District wise percentage is calculated with the total
sanctioned and total respondents were allocated as per the percentage of the selected
districts.

22
Both the secondary and primary data were used in the study. The secondary data pertaining
to different indicators of higher education were collected and analyzed. The indicators
include number of universities and colleges of higher education, enrolment in higher
education, budgetary allocation and expenditure pattern for higher education in different
years for India and the study state i.e. Maharashtra. In order to know the socio-economic
impact of education loan, its determinants and the rate of interest, mode of repayment etc
used. Primary data collected from the students already taken loan from State Bank of India
in the selected district. We took 250 beneficiaries availing bank loan for the purpose of
pursuing their higher education. The list of beneficiaries was collected from the records of
the SBI Bank branches and they were selected purposively. The researcher contacted the
selected beneficiaries to provide the required information. The beneficiaries are from
different branches of faculty like, B. Tech, M. Tech, MBA, MBBS and MCA etc. The
information like their socioeconomic background, educational qualification and their
parent's education, occupation, residential status and mode of repayment of loan etc were
collected.

Purposive sampling technique was used to select students and the selection of samples is
primarily based on the following factors:

a) Annual income of families who had taken loan: the sample covered families of low,
medium and large income groups.

b) All courses which are funded by the banks are covered: job-oriented professional courses,
technical courses, graduation and post-graduation.

c) Financing of courses in India and abroad are covered.

d) Only State Bank of India Education loans is covered.

e) Geographical location: Only urban areas are covered.

23
CHAPTER.7

DATA ANALYSIS

Nationalized banks have become a helping hand to the students who wish to pursue higher
education for gaining a competitive edge in their careers. Since education is becoming
costlier by the day and footing the college or university fees is a strain on the lower and
middle-class pockets, banks have become more supportive in extending loans to them. The
educational loan scheme launched by Reserve Bank of India in 2000-2001 provides financial
assistance to students seeking admission to professional colleges to pursue higher
education for graduate/post-graduate courses. As per Indian Bank's Association (IBA)
recommendations, the Model Educational Loan Scheme was announced in Union Budget for
2001-2002. Accordingly, all 28 nationalized banks were advised to implement the scheme. In
20042005, the educational loan scheme was reviewed by the Working Group of General
Managers from few select banks constituted by IBA. Accordingly, some modifications were
made in the educational loan scheme to facilitate smooth operation at bank branches.
There are 28 nationalized banks in India. Out of these, a sample of seven banks has been
selected as sample for the study. The sample is selected on the basis of the location of the
Head Offices or Regional Offices of the Banks with in Mumbai region. Thus, importance was
given to the residential location of the Banks. The seven banks 108 (sample) which have
their Head Offices or Regional offices in Mumbai are as follows:

1. Bank of Maharashtra.

2. Bank of Baroda.

3. Central Bank of India.

4. State Bank of India.

5. Union Bank of India.

6. Bank of India.

7. Dena Bank.

24
The data for all 28 nationalized banks has been collected and tabulated for analysis and
interpretation. The data has also been collected and tabulated for the sample banks for
analysis. The data collection includes the amount of educational loans disbursed and
amount outstanding. It also includes the number of accounts (student borrowers) for the
educational loans disbursed and outstanding. The data is presented in two parts:

Part A: - Brief Profile of the sample and

Part B: - Data analysis.

The primary data has been collected from the internal report of Indian

Banks Association. Sources of secondary data include newsletters of

IBA, websites of nationalized banks, Reserve Bank of India

publications and Reserve Bank of India circulars and newspapers.

NUMBER OF STUDENT LOAN BY AGE IN DIFFERENT YEARS

25
INTERPRETATION

Educational Qualification of the Respondents

Education is one of the most important characteristics of the customers because the
perception, awareness and behavior of the customers depend largely on his/her educational
qualifications. Among the selected respondents, a majority (55%) were graduates, while 10
had studied upto S.S.C. level and 6 were educated upto H.S.C. and under graduate levels.
Apart from this, 23 respondents had other qualifications like Diploma, etc. The relevant data
are provided in table.

Educational Qualifications of the Respondents

26
EDUCATIONAL LEVEL

PUBLIC & PRIVATE SECTOR EDUCATIONAL LOAN

27
CHAPTER.8

REVIEW OF LITERATURE

Shatrugna, in his article :Financing higher education" (2004)analysis the review and
restructure of the norms for financing the education sector. Since 1950's higher education
has been financed, mainly by the central and state governments has financed higher
education. After the inauguration of new economic policy 1991, there is a major change in
financial commitment of the government. The demand for higher education has been rise
over the years from all sections of the society. To examine the pattern of utilization of the
grants, the committee recommended that the UGC may find a mechanism of providing an
appropriate incentive grant, perhaps in the nature of marching grant as an incentive to
universities generating their own resources. The committee recommendations are more or
loss the same in regard to the aided deemed universities. While, it is true the expenditure
on higher education has gave up over the years, the major expenditure on higher education
has gave up over the years, the major expenditure has mostly been on the non-plan side.

Tilak in his study, "funding higher education in India". (2005) Analysis the need for
continuation of the crucial role of the state in funding higher education. There is a need to
raise more resources in the regard included fees and loans. He observed that the costs of
higher education are three components, academic costs, academic costs, academic support
cost, and student welfare costs. He argued that the industrial sector was ready to make
huge investment in higher education and research development. The state should continue
to play the dominant role in financing higher education. There is need to improve the
mechanism of UGC and governments growth to universities and institution of higher
education. Efforts can be made to raise resources from non-government sources. The
conclusion is that all aspects of higher education is grants, costs, fees, cost of recovery
scholarship, other direct and indirect subsides, generation of other internal resources etc.,
should be completely transparent.

Saritha sinha in her study on "women's education in India". (2005)The myth and the reality,
analysis the shaping the woman resources for economic development. Educational
development and acquisition of vital skills are necessary for woman if they have to play
efficiently even the traditional role as wife and mother. Women is now adopting the carrier
of her own and sharing equally with him.

28
CHAPTER.9

FINDING & SUGGESTIONS

1. The average satisfaction index of 150 respondents is 64%

2. There exists a significant association between the age and the level of satisfaction of
respondents. Their satisfaction is the (66.5%) to those who fall under the age group of 23-24
years.

3. There exist to close association between the sex and level of satisfaction of the
respondents. The satisfaction is more with male respondents (66%)

4. There exist a significant association between the nature of residence and level of
satisfaction of the respondents. The satisfaction is more with reference to
dayscholar(64.5%)

5. There exists a significant association between the educational qualification of the


respondents and their satisfaction. The satisfaction of the respondents who have
educational qualification up to M.Sc(software), is the greatest (68.5%) in comparison to
other group of respondents.

6. There exists a close association between the family monthly income and their
satisfaction. Whose monthly income is above Rs.12,000 is greatest (67%) comparatively
others.

7. There exists a close association the family strength of the respondents and their
satisfaction. The satisfaction of respondents, whose family strength is up to four members,
is the highest 66%

8. There exists a close association between the fathers/guardians occupation and their
satisfaction, 65% in officers side as well as the same percentage in professional side.

9. There exists a significant association between the educational qualification of the


father's/guardian and their satisfaction. The satisfaction of the respondents whose
educational qualification of father's/guardian is post graduate level is the greatest 66% in
comparison to other group of respondents.

29
SUGGESTIONS TO THE BANKER

1. The banks may liberalize its procedure to get the educational loan for make it easy to

students.

2. The banks may not ask securities to provide loan because majorities of there are not
having sufficient account of assets with them.

3. The bankers should educate should about loan in higher secondary it self.

4. The bankers give an advertisement for rural area of student .

SUGGESTIONS TO THE GOVERNMENT

1. The government may particularly concentrate in professional oriented course as well as


for technologies and diploma course.

2. The government may great some assistant to bank for readies, which change while
educational loan.

30
CHAPTER.10

ADVANTAGES OF EDUCATION LOAN

A dignified education can change the entire life of a person, leading him towards a
successful life and financial independence. Education loan enables you to meet the financial
demands of a reputed MBA program or any such professional course. The best part of these
loans is that once you complete your objective and achieve financial freedom, you can pay
back them easily. Hence, the commitment involved with such loans is very reasonable and
appealing.

Financial institutions have made an education loan an easygoing task for the applicants. One
can apply for the loan by visiting the bank in person or through website of the bank.
Majority of the banks provide online application forms and detailed relevant information for
applicants’ convenience.

Student loans are great alternatives as compared to conventional loans. They not only offer
lucrative interest rates but also have easier terms and conditions. Majority of the
nationalized banks generally do not ask for any security and charge no margins for a loan
amount up to Rs. 4 Lacs.

Another key benefit of these loans is the deferment of re-payments. 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. Student
loans also show considerable flexibility towards loaner in terms of repayment schedule.

The best advantage of education loan is that it not only satisfies the financial need to
proceed with higher education but helps in saving income tax also while repayment. Tax
benefits on education loan end up reducing overall cost of the loan.

31
DISADVANTAGES ON EDUCATION LOAN

Education loans are definitely a boon for students aspiring for higher studies and aid them
financially but in most cases, the choice is driven by the aggressive and forceful marketing
strategies done by banks offering these loans. More than aiding a student, the stake of the
financial institutions lies in, increasing the profitability of their business. They stand out as a
prudent product for the banks to sell and achieve margins.

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.
In many cases, bank disclosures for securities (viz. mortgages, guarantee) are not adequate
or presented in a very complex manner for applicants to understand, given their limited
understanding of credit market. Due to such complexity, applicants are not fully acquainted
with the schemes and risks involved in availing the credit. Hence, when re-payment process
starts, borrowers have to deal with unexpected problems which leave them helpless.

It’s very important for borrowers to analyze the long run suitability of the loan beforehand
so that debt does not lead to an unmanageable situation. In case a candidate is not able to
repay the loan as per schedule due to some unavoidable situations, he has to suffer great
hassles owing to the bank’s mounting pressure for repayments.
Majority of the banks are unable to provide proper assistance to the borrowers who are
facing a tough time during repayments. Loaners are not ensured any rights and remedies by
the banks if caught in unaffordable loans. Loans may go into default very soon after missed
payment.

Generally in the beginning banks, do not inform adequately about workout and cancellation
procedures and later start putting late fee, and other charges for delayed payments, further
increasing the overall cost of loan. Although most of the banks try to co-operate and show
considerable flexibility in terms of payment schedule, they usually turn out to be inflexible in
granting long- term repayment relief for borrowers.

Undoubtedly, today, when higher education is costlier than ever, education loans are the
most welcomed antidote by aspiring candidates. Certainly, these loans are the best answer
to financial shortage for a successful career if chosen wisely; else, they become a burden
and lead the borrower to a disastrous situation.

32
CHAPTER.11

SUMMARY & CONCLUSION

Indian Banking, especially the Public Sector Banks, has performed impressively in achieving
social goals, extending the geographical reach and functional spread of financial services,
especially for the rural poor. The massive and speedy quantitative growth as well as the
unprecedented growth in social lending/banking has created a number of strains. However
since the mid-1980’s, banks have entered a phase of consolidation and enhanced
sophistication. The commercial principles of viability, efficiency, prudence and profitability
are now receiving much attention. The new banking scenario has called for more efficiency
on the part of the banks simultaneously with shouldering the responsibility of developing
the backward regions and neglected social sectors. The Indian Banking system has
responded positively for this call by improving the quality of the assets and the profitability.
At the same time, the Reserve Bank has been making consistent efforts to strengthen credit
delivery, improve customer service and encourage banks to provide banking services to all
segments of the population. Despite considerable expansion of the banking system in India,
large segments of the country’s population are not adequately served, some as savers and
others as borrowers. The expansion of banking services that are designed to serve all
potential customers efficiently is, therefore, emerging as a major concern that is engaging
the attention of the authorities: Reserve Bank of India/Government.

33
CHAPTER.12

BIBLIOGRAPHY

Aggarwal, R.B. (1993), Financing of Higher Education in India, Ganga Kaveri


Publishing House, Varansi.

Agarwal, P. (2006), Higher Education in India: The Need for Change, Working
Paper No. 180, Indian Council for Research on International Economic
Relations, New Delhi.

Ahluwalia, M.S. (2000), “Economic Performance of States in Post-Reform


Period”, Economic and Political Weekly, Vol. 35 (19), May 6, pp. 1637-1648.

AICTE (1994), Report of the High Power Committee for Mobilisation of


Additional Resources for Technical Education (Dr. Swaminadhan Committee
Report), All India Council for Technical Education (AICTE), New Delhi.

Arrow, K.J. (1993), “Excellence and Equity in Higher Education”, in Mark Blaug
(ed.), Economics of Education, Part 1, Penguin Books Ltd., pp. 5-12. Azad, J.L.
(1975), Financing of Higher Education in India, Sterling Publishers, New Delhi.

Azad, J.L. (1984), Government Support for Higher Education and Research,
National Institute of Educational Planning and Administration (NIEPA) and
Concept Publishing Company, New Delhi.

34
Bedi, P. (1995), Analysis of Costs of Education at Various Levels: A Case Study
of Jalandhar District, Unpublished Ph.D. Thesis, Guru Nanak Dev University,
Amritsar.

Benihabib, J. and M. M. Spiegel (1994), “The Role of Human Capital in


Economic Development: Evidence from Aggregate Cross-Country and Regional
U.S. Data”, Journal of Monetary Economics, Vol. 34 (2), pp. 143-174.

Birdsall, N. (1983), Strategies for Analyzing Effects of User Charges in Social


Sector, World Bank, Washington, D.C

Blaug, M. (1965), “The Rate of Return on Investment in Education in Great


Britain”, The Manchester School, Vol. 33 (3), pp. 205-251.

Blaug, M. (1968), Economics of Education 1, Penguin Books Ltd.,


Harmondsworth, Middlesex, England.

Blaug, M. (1969), Economics of Education 2, Penguin Books Ltd.,


Harmondsworth, Middlesex, England. Blaug, M., P.R.G. Layard and M.

Woodhall (1969), The Cause of Graduate Unemployment in India, Allen Lane,


Penguin Press, London. Blaug, M. (1970), An Introduction to the Economics of
Education, Penguin Books Ltd. Harmondsworth, Middlesex, England.

Blaug, M and M. Woodhall. (1979), “Pattern of Subsidies to Higher Education


in Europe”, Higher Education, Vol. 7(3), Penguin, London.

35
Brar, J.S. (1999), Punjab’s Educational Progress, and Educational Expenditure
(1967-68 to 1993-94), Centre for Research and Economic Change, Punjabi
University, Patiala.

Brar, J.S. (2002), “Basic Education, Health Care and Economic Growth in
Punjab”, Man & Development, Vol. 24 (1), pp. 51-63.

36
CHAPTER.13

ANNEXURE

QUESTIONNAIRE :

Educational Loans in Professional Higher Education

GENERAL PROFILE

Name of Student loanee……………………………………………….

Father’s Name………..………......................... Sex ………. Religion………….………..

Age (years)……..... Caste……………………….....................

Marital Status: Married/ Unmarried/ Any other Specify: ……………………….

Permanent Address………………………………………………………………

District……………………State...…………..Phone No. ..……………………..

Location Status: Rural/Urban/ Semi urban……………………………………

Category: Gen./OBC/SC/any other specify ………………………………..........

37
EDUCATIONAL PROFILE OF THE STUDENT LOANEE

FAMILY MEMBER’S PROFILE

(a) Type of Family: Joint/ Nuclear (b) No. of family members: ……………

(c) No. of brothers: …………….. (d) No. of sisters: …………………….

(e) No. of family members in your family who are studying: …………………..

38
(f) About your family members

(g) Total income of the family per annum from all sources: …………………

(h) Total income of your household members per annum: …………………...

(i) Total saving of your household members per annum: …………………….

(j) Do you own agricultural land: Yes/No if yes, then how much in acres: …

(k) Do your family own any shop/ business property, if any then specify……..

(l) Is your family getting any rent from property, if yes then specify………….

(m) Do any member of your family is getting pension, if yes then specify……..

(n) Is your family getting remittances from abroad, if yes then specify…….….

(o) You are living in your own house or rented house give details…………….

(p) If your family is residing in govt. quarter, then do you have your own house
Yes/No if yes, then give details………………………… (q) How many members of your family are
studying on loan (if any) give details………………………………………………………………………

(r) Are your family members paying income tax: Yes/ No If yes then how much in last
financial year: ………………….

39
(s) Do you have any personal computer / laptop (specify): (t) Do your mother/ father have
any prestigious club membership? If yes, then Give details: Name……………….…
City……………State…………………. Membership fee per annum in Rs.

HOUSEHOLD AMENITIES

1. Type of house: kuchha / pucca / Mixed

2 . Type of fuel used at house: LPG/ kerosene oil/coal/ any other specify…

3. RO system available at home: Yes/ No

4. No. of vehicles: ………. Car………..Bike………….. Cycle……………….. Any other (specify):

………………………………………………………...

5. A.C. Yes / No if yes, then how many…………..…..

6. Source of water supply: Taped/Well/Hand pump/any other specify……..……

7. T.V: Yes/ No

8. Refrigerator: Yes/No

9. Washing machine: Yes/ No

10. Sewerage: Yes/ No

11. Microwave/Oven: Yes/ No

12. Landline telephone: Yes/ No

13. Monthly average amounts paid by your family as electricity bill in Rs…… 14 Total

monthly expenditure of the family in Rs. ………………………

14. Total monthly expenditure of the family in Rs. ……………………….

40
INSTITUTIONAL/ COURSE INFORMATION ATTENDED WITH EDUCATIONAL
LOAN

(a) Name of the institute: …………………………………………………..

(b) Type of the institute: Govt. / Private/ Aided/ any other (specify)………....

(c) Name of the course: …………………………………………...………..

(d) Nature of the course: annual/semester/any other (specify)……………...

(e) Why have you joined this course: …………………………...…………....

(f) Duration of the course (years): .…...........................................................

(g) Total expenditure of the course in institute………………………………..

(h) Other expenses: purchase of books……………Study tour………………. Project work if


any………………………….Equipment………………… Computer/laptop………………………. ….. Uniform
…………………...

(i) Have you got admission to the course under NRI quota: Yes/ No

(j) Where are you residing: Hostel/ PG/ any other (specify)……………….....

(k) Daily commute: if yes, then Mode of transport.………………………….. Distance between


house (present stay) and institute……………

(l) Mode of payment to the institute: cash/ bank draft/ cheque/ any other (specify):
…………………………………………………………………...

(m) How many of your classmates have taken loan: ………………………....

(n) Is there any loan office in your institute: .....................................................

(o) Is there any agent provided by institution for educational loan…….. ……

(p) Is there any lecture by bank officers in your institute since you have joined this
course…………………………………………..........................

(q) Is there any course time limit regarding loan by bank, specify………...…

(r) Is there any course time limit by institute, specify ……………………..

41
(s) Have you got any fees concession during this course……………….……

(t) Have you got any scholarship during this course if yes, then specify……......

Amount……………………

(u) Is there any problem by institute regarding loan if yes, then specify………..

(v) Have you discussed about educational loan with your teacher: Yes/No

If yes, then specify his/her reaction……………………………………………...

(x) Are you taking any tuition: Yes/ No

if, yes then in which subject: …………………………..tuition fees.…………...

(y) Is there any self contribution by you in expenditure of course, if yes then how

much………………………………………………………………...

EDUCATIONAL LOAN INFORMATION

(a) From which source you got information about educational loan: friends/ Relatives/
teachers/ educational loan mela/ agent/ any other specify……………

(b) Have you attended any educational loan mela: Yes/ No

(c) Name of the bank/ institute from which you have taken loan: ...……….

(d) Why did you take loan from this bank/ institute not from any other give reason: local
area bank/ low rate of interest/ any other specify…………...……..

(e) How many banks you have tried…………write their name………..…..


.………………………………………………………………………

(f) Is there any co applicant for loan: yes/ no if yes, then give details…….…. Educational
loan Year…………...........Time period…………………...… Applied Amount …………………..
Sanctioned Amount….……… Outstanding
Amount………………… Rate of interest ………………… Grace period
..…………………………...Type of interest rate fixed/ floating Time to process:
…………….Mortgage: ………….Margin:………………Location of bank: …

(g) Have you taken loan in installments: Yes/ No If yes, then nature of installment:
Monthly/ Six monthly/ annually Amount of installment:

42
(h) Whether you got loan easily: Yes/ No

If no, then what kind of problems have you faced: …………………

(i) Have you take loan directly from bank/ institute: Yes/ No

If no, then who was the middle person? …………………..

(j) Total transactional costs of the loan: Transport cost: ………………………….Paper work

cost:……………. Commission (specify amount)………....Processing charges:…………… No. of

days forgone and estimated loss of income: …………………………….. Any other cost, specify:

(k) Is there any life insurance by bank under any scheme: Yes / No

if yes then specify: ………………………………………………………………..

REPAYMENT INFORMATION

(a) Are you repaying your loan during the course: Yes/ No If yes, then whether your family
is repaying your loan or you (specify):

(b) Have you worked during the course: Yes/No If yes, then what type of work you did:
…………………………….... Nature of the job: full time/ part time/ any other specify: ……………....
Earnings: Timings: Time Period:
Place:

(c) Amount repaid till now:

(d) Repayment in the form of installment or lump sum: If in the form of installment, then

nature of installment: Monthly/ six monthly/ annually:

Amount of installment:

(e) Is there any penalty interest if installment is not paid in time: Yes/ No

if yes then how much:…………………………………………

(f) Have you taken any other loan for repayment of educational loan: Yes/No

If yes, then specify?

43
(g) Have you faced any problem during the repayment of loan: Yes/No

If yes, then specify:

(h) Any installment of loan not repaid on time: Yes/ No

If yes, then specify the reason:

(i) Is there any exemption from repayment in serious conditions: Yes/ No

If yes then give details:

(j) Is your income sufficient to repay the loan: Yes/No

(k) Source of repayment (specify):……………………………………………

OTHER INFORMATION

(a) Have you been employed after the completion of course: Yes/No

If yes, then how much time after the completion of course you got the job........

(b) Nature of job: Regular(full time)/ Part time/any other specify: Govt./private/any
other (specify) Post: Income (annually): Timings:

(c) Did you get job easily: Yes/No

If no, then what type of problem you faced (specify):

(d) Do you plan to pursue further study: Yes/No

If yes, then on educational loan: Yes/No

If no, then why:

(e) Do you think present loan discourages your further study: Yes/ No

If yes, then state the reason……………………………………………..

44
(f) Do your teachers know that you are studying on loan: Yes/No

If yes, then is there any change in their behavior regarding you as compared to other

students: Yes/No

(g) Do any of your classmates know about your educational loan: Yes/No

If yes, what is their reaction towards you?

(h) Will educational loan get populari

45
SUGGESTIONS

(a) Should there be some relaxation in the rate of interest to girl students to encourage
women education: Yes/No

(b) Should there be some relaxation in the rate of interest or preference to: Meritorious
students: Yes/No

Economically weak students: Yes/No

SC/ST/BC/ OBC: Yes/ No

Physically handicapped students: Yes/No

(c) If there was no such option as loan then what would you have done:

(d) Give suggestions to improve the educational loan system:

ty in coming years: Yes/No

46

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