Chintaman Sankhala Final Mrp

8/4/2019 Chintaman Sankhala Final Mrp

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DEVI AHILYA VISHWAVIDYALAYA, INDORE

MAJOR RESEARCH PROJECT

On

A Comparative Study of

Professional & Traditional

Programs Students Perception

towards Educational loan

schemes

A Research Dissertation Submitted in

Partial Fulfillment

For the Award of the Degree of

Masters of Business Administration

(2009-2011)


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Submitted to:Submitted by:

Prof. Kanika Mehta Chintaman Sankhala

Faculty som M.B.A. IV SEMSIMS, Indore

CERTIFICATE FROM INTERNAL & EXTERNALEXAMINER

This is to certify that Chintaman Sankhala of MBA (Full Time)Semester IV in Sanghvi Institute of Management and Science,

Indore has carried out a Major Research Project titled A

Comparative Study of Professional & Traditional

Programs Students Perception towards Educational

loan schemes. The work done by him is genuine and

authentic.

The work carried out by the student was found satisfactory.

We wish him all the success in career.

Internal Examiner

External Examiner


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Signature

Signature

CERTIFICATE FROM DIRECTOR GENERAL, H.O.D. &FACULTY GUIDE

This is to certify that Chintaman Sankhala of MBA (Full time)

Semester IV in Sanghvi Institute of Management and Science,

Indore carried out a Major Research Project titled A



loan schemes.

The work carried out by the student was found satisfactory

and it is as per the faculty guide.


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Prof. Prashent Gupta Prof. Gaurav Singh

Prof. Kanika Mehta.

(Director General of SIMS) (H.O.D. of SIMS)

(Faculty Guide)

DECLARATION

I, Chintaman Sankhala, a student of Management, Sanghvi

Institute of Management & Science, hereby declare that the

work done by me to do the Major Research Project titled A



loan schemes is genuine and authentic.

Chintaman Sankhala


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M.B.A. IV SEM

SIMS Indore

ACKNOWLEDGEMENT

I sincerely and religiously devote this folio to all the gem of

persons who have openly or silently left an ineradicable mark

on this research so that they may be brought into

consideration and given their share of credit, which they

genuinely and outstandingly deserve.

This expedition of research encountered many trials,

troubles and tortures along way. I am essentially indebted to

my guide Prof. Kanika Mehta for this sweating learning

experience. She overlooked my faults and follies, constantly

inspired and mentored via her proficient direction. It was a

privilege to work under her sincere guidance.


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I express my thanks to Prof. Prashant Gupta, Director

General of Sanghvi Institute of Management & Science,

Indore for his considerate support whenever and wherever

needed. I honestly acknowledge the support provided by the

coordinators, Prof. Gourav Singh & Prof. Vikas Pathak. Iexpress my indebtedness to the management of Sanghvi

Institute of Management & Science, for inspiring us to grab

and utilize this opportunity.

With profound sense of gratitude, I would like to truthfully

thank a recognizable number of individuals whom I have not

mentioned here, but who have invisibly facilitated in

transforming this research into a success saga.

Above all, I would like to conscientiously thank the

Omnipotent and Omnipresent and Omniscient God for his

priceless blessings!

Chintaman

Sankhala(

MBA IV SEM)

Preface

Decision making is a fundamental part of the research

process. Decisions regarding what you want to do, how you

want to do, what tools and techniques must be used for the

successful completion of the project. In fact researchers


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efficiency as a decision maker that makes project fruitful for

those who concern to the area of study.

Basically when we are playing with computer in every part

of life, I used it in my project not for the ease of my work but

for the ease of result explanation to those who will read this

report. The project presents the Study of Professional &

Traditional Programs Students Perception towards

Educational loan schemes.

I had toiled to achieve the goals desired. Being a neophyte

in this highly competitive world of business, I had come

across several difficulties to make the objectives a reality. I

am presenting this hand carved efforts in black and white. If

anywhere something is found not in random to the theme

then you are welcome with your valuable suggestions.

Executive Summary

Many Education loan providers are come up with very

good schemes and the best possible product to the customer


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who has led to the growth of education loan market in India.

The education loan providers try to attract customers by

providing them best possible different categories so that

they can retain customers for long and make them loyal

towards their product.

The loan market is booming in India. It became for

marketers to understand these relationships for successful

execution of education loan strategies.

The data was collected by getting the questionnaire filled

by 50 peoples of Indore. The purpose of this study knows the

Students Perceptiona Comparative Study ofProfessional & Traditional Programs Students

Perception towards Educational loan schemes.

Introduction


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Education loans can augment the boundaries of what you can

achieve

Education loan is becoming popular day by day because of the rising fee

structure of higher education. It came into existence in 1995 started first by

SBI bank and after that many banks started offering study loan.

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

lives and getting an education not only is a great achievement but something

that gives you the tools to find your own way in the world. the word

education loans. Loans for education you have never thought about it as a

feasible arrangement.

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

category of education loans. There are many types of education loans.

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

financial backup to their education plans. Private education loans are not

endorsed by other government agencies but are provided by other financial

institutions. Private education loans program are optimum for both

undergraduate and graduate studies.

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

and fast rule, but education certainly helps you in gaining an upper hand.

With universities getting expensive by each day an education loan will

certainly give you an incentive to go ahead with your education plans. Each


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year while contemplating on your education plans the thought of finances

almost invariably comes in. While working towards you degree, you are

constantly plagued about paying for the education fees, books, and other

living expenses. Education loans can provide funding for tuition fees, board

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

help you with all these expenses. Education loans are sufficient enough to

take care of all these expenses.

Education is central to the Human Resources Development and

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

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

However, an education loan like every loan is a huge financial obligation. An

education loans is generally the first substantial loan for most people and

therefore the first major expense.

Literature Review


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Loan burdens and educational outcomes James

Monks

Department of Economics, University of Richmond,

Richmond, VA 23173, USA

Received 1 May 1999;

Accepted 24 April 2000

Available online 30 September 2001.

AbstractThere is widespread concern among educators, policy makers, and students

that the current generation of college graduates is being unduly burdened

with debt. This study examines the impact of debt on the educational

outcomes of recent graduating seniors from a set of private, expensive,

highly selective colleges and universities. In particular, I investigate the

relationship between borrowing levels and the likelihood of pursuing agraduate degree, a professional degree, and the career plans of the college

class of 1998. The central conclusion drawn from this analysis is that

students do not appear to be significantly influenced by their debt.

ECONOMIC REFORMS AND FINANCING

HIGHER EDUCATION IN INDIA -P.

Geetha Rani


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National Institute of Educational Planning and

Administration,

17-B, Sri Aurobindo Marg

New Delhi 110 016.

Abstract

It is unambiguous that Policy of the Government of India now

encourages augmentation of resources for covering a larger

portion of cost of higher education. Recent policy changes in

India often favour to divert resources from higher to primarylevel of education and favours for full cost recovery from

students even in public higher education institutions. Cost

recovery measures comprising of increase in fees, student

loans currently operated by commercial banks and

privatisation will exacerbate inequality in the society. Indeed,

there seems to be a nexus between the present student loan

scheme and full cost recovery. Increasing reliance on student

fees, student loans and privatisation without considering thelow-income groups may produce regressive effects in the

society. Under the deep waves of globalisation and

competition, important economic rationale for government

funding especially for higher education is neglected. Public

support for higher education remains essential to ensure a

balanced achievement of educational and social missions,

apart from surviving in the knowledge-based society. It is

essential that funding sources must be diversified but cost-sharing with students has social and political limits, and

excessive commercialization of higher education should be

forbidden.


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The Objectives of the study

The Educational Loan Scheme outlined below aims at providing financial

support from the banking system to deserving students for pursuing higher

education in India and abroad. The main emphasis is that every deserving

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.

APPLICABILITY

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.

ELIGIBILITY CRITERIA:

Student eligibility:

Should be an Indian National

Secured admission to professional/ technical courses in India or

Abroad

Through Entrance Test/ Merit Based Selection process.

Courses eligible


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Studies in India: (Indicative list)

Graduation courses : B.A., B.Com., B.Sc., B.E., 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,GRE, etc.

Regular Degree/Diploma courses like Aeronautical, pilot

training, shipping etc., approved by Director General ofCivil Aviation/Shipping, if the course is pursued in India. In

case the course is pursued abroad, the Institute should be

recognized by the competent local aviation/shipping

authority

Courses offered in India by reputed foreign universities.

Other courses leading to diploma/ degree etc. conducted

by colleges/ universities approved by UGC/ Govt./ AICTE/AIBMS/ ICMR etc

Courses offered by National Institutes and other reputed

private institutions. Banks may have the system of

appraising other institution courses depending on future

prospects/ recognition by user institutions.

Courses, which are not covered under the criteria

mentioned above, individual banks may take a view to

consider extending

education loan under the scheme taking into account the

future prospects/recognition by user institution.


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Studies abroad:-

Graduation : For job oriented professional/ technical

Courses offered by reputed universities.

Post graduation: MCA, MBA, MS, etc.

Courses conducted by CIMA- London, CPA in USA etc.

Expenses considered for loan:

Fee payable to college/ school/ hostel.

Examination/ Library/ Laboratory fee.

Purchase of books/ equipments/ instruments/ uniforms.

Caution deposit, Building fund/refundable deposit supported by

Institution bills/receipts, subject to the condition that the amount does

not exceed 10% of the total tuition fees for the entire course.

Travel expenses/ passage money for studies abroad.

Purchase of computers - essential for completion of the course.

Insurance premium for student borrower

Any other expense required to complete the course - like study tours,project workthis is etc.

QUANTUM OF FINANCE:

Need based finance subject to repaying capacity of the

parents/ students with margin and the following ceilings.

Studies in India - Maximum Rs.10.00 lacs.

Studies abroad - Maximum Rs.20 lacs

MARGIN:


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Up to Rs. 4 lacs NilAbove Rs.4lacs :

Studies in India

5%

Studies Abroad 15

%

Scholarship assistantship to be included in margin.

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

when disbursements are made on a pro-rata basis.

SECURITY:

Up to Rs 4 lacs Co-obligation of parents.

No security

Above Rs.4 lacs and up

to Rs7.5 lakhs

Co-obligation of parents together with

collateral security in the form of suitable

third party guarantee. The bank may, at

its discretion, in exceptional cases, waive

third party guarantee if satisfied with thenet-worth / means of parent/s who would

be executing the document as "joint

borrower".

Above Rs.7.5 lakhs Co-obligation of parents together with

tangible collateral security of suitable

value, along with the assignment of

future income of the student for payment

of installments

Note:-


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The loan documents should be executed by both the student

and the parent/ guardian as joint-borrower.

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

securities/ Public Sector Bonds/Units of UTI, NSC, and KVP,

life policy, gold, shares/mutual fund units/debentures, bank

deposit in the name of student / parent / guardian or any

other third party with suitable margin.

Wherever the land/ building is already mortgaged, the

unencumbered portion can be taken as security on second

charge basis provided it covers the required loan amount.

In case the loan is given for purchase of computer, the

computer has to be hypothecated to the Bank.

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 to be charged as applicable to individual

banks.

APPRAISAL / SANCTION/ DISBURSEMENT:


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In the normal course, while appraising the loan the

future income prospects of the student will be looked

into. However, where required, the means of parent /

guardian could also be taken into account to evaluate

re-payment capability.

The loan to be sanctioned as per delegation of powers

preferably by the Branch nearest to the place of

residence of parents.

No application for educational loan received should be

rejected without the concurrence of the next higher

authority.

The loan to be disbursed in stages as per the

requirement/ demand directly to the Institutions/

Vendors of books/ equipments/ instruments to the

extent possible.

REPAYMENT:

Repayment

holiday/Moratoriu

m

Course period + 1 year or 6 months

after getting job, whichever is earlier.

The loan to be repaid in 5-7 years after commencement ofrepayment. If the student is not able to complete the course

within the scheduled time, extension of time for completion

of course may be permitted for a maximum period of 2

years. If the student is not able to complete the course for

reasons beyond his control, sanctioning authority may at his


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discretion consider such extensions as may be deemed

necessary to complete the course.

The accrued interest during the repayment holiday

period to be added to the principal and repayment in

Equated Monthly Instalments (EMI) fixed.

1% interest concession may be provided for loans if the

interest is serviced during the study period when

repayment holiday is specified for interest/ repayment

under the scheme.

INSURANCE

Banks may arrange for life insurance policy on the students

availing Educational Loan. Individual Banks may work out the

modalities with insurance companies

FOLLOW UP/TRACKING:

Banks to contact college/ university authorities to send the

progress report to the bank at regular intervals in respect of

students who have availed loans. In case of studies abroad,

bank may obtain the Unique Identification Number(UIN)/Identity Card and note the same in the bank's records.

PROCESSING CHARGES

No processing/ upfront charges may be collected on

educational loans for studies in India.


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CAPABILITY CERTIFICATE:

Banks can also issue the capability certificate for students

going abroad for higher studies. For this purpose financial

and other supporting documents may be obtained from

applicant if required.

(Some of the foreign universities require the students to

submit a certificate from their bankers about the sponsors'

solvency/ financial capability, with a view to ensure that the

sponsors of the students going abroad for higher studies are

capable of meeting the expenses till completion of studies.)

OTHER CONDITIONS:

Deserv Students

Banks which wish to support highly and exceptionally deserv/

deserving students without security may delegate such

powers to a fairly higher level authority.

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


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taken in relation to the total quantum of finance disbursed,

subject to margin and repaying capacity of the

parent/student.

Minimum Age

There is no specific restriction with regard to the age of the

student to be eligible for education loan.

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.

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.

Disposal Application

Loan applications have to be disposed of within a period of

15 days to 1 month, but not exceeding the time norms


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stipulated for disposing of loan applications under priority

sector lending.

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.

RESEARCH METHODOLOGY

PROJECT TITLE: A Comparative Study of

Professional & Traditional Programs Students

Perception towards Educational loan

schemes.

To compare education loan schemes & policies of the Punjab

National Bank (PNB), State Bank of India (SBI) and Hong-Kong

Shanghai Banking Corporation (HSBC)

METHODOLOGY:


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In this research I have adopt the Exploratory Research

method only for PNB, SBI and HSBC Education loan schemes

for just compare the offer document of these three banks.

DATA SOURSE:

Primary data is taken from various internal documents and

circulars issued by the banks from time to time and

Secondary data is taken from different books and financial

information published in newspapers and from the banks

websites and other related websites.

SCOPE:

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

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

Banking Corporation (HSBC).

LIMITATIONS:

There are some limitations in this research; these limitations

are as follows

Time limitation

Many banks provide education loan but in this research

only three banks are taken for consideration.

Expenditure on research

Some banks are not provided their internal

information/circular.

FINDINGS


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Sl. Parameter Private Banks

Public Banks

No.

1. Beneficiaries Economically affluent Economically

weaker

Sections of society. Sections

also.

2. Objective Commercial National

and social

3. Aimed at Profit earning not profit alone

4. Margin money Must Flexible

5. Security Necessary Less important

6. Interest rate High Reasonable

7. Attitude Rigid and strict Flexible and

liberal

Sl.

No.

Basis of

Differen

ce

PNB SBI HSBC

1 Max. loan

for studies

in India

Rs. 7.50 Lacs Rs. 10.00 Lacs Min. Rs.

50,000 to a

Max. of Rs.

25,00,000


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2 Max. loan

for studies

in Abroad

Rs. 15.00 Lacs Rs. 20.00 Lacs Not

Available

3 Interest

Rates

Upto Rs.4.00

lacs PTLR

Above Rs.4.00

lacs PTLR

+ 1%

Upto Rs. 4 lakh

10.50% p.a.

Above Rs. 4 lakh

11.50% p.a.

9.5% p.a +

10% service

tax + 2%

education

cess

4 Repayment

Period

starts from

one year after

completion of

course or 6

months after

securing a job,

whichever isearlier.

one year after

completion of

course or 6 months

after securing a job,

whichever is earlier.

Not

Available

5 Repayment

Period

To be repaid in

5-7 years after

commencement

of repayment

In India : Up to Rs.

7.5 lacs - 5-7 years

Above Rs. 7.5 lacs

-5-10 yearsIn Abroad : Up to

Rs. 15 lacs 5-7

years

Above Rs. 15 lacs

5-10 years

up to 4

years for

unsecured

loans and 7years for

secured

loans

(against

security of a


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residential

property /

shares).

6 Margin Upto Rs. 4.00

lacs :

Nil

Above Rs. 4.00

lacs :

Studies in

India 5%

Studies in

Abroad 15%

Upto Rs. 4.00 lacs

: Nil

Above Rs. 4.00 lacs

: Studies in

India 5%

Studies in

Abroad 15%

Not

Available

7 Processing

Fees

No processing

fee/upfront

charges

No processing

fee/upfront charges

Deposit of Rs.

5000/-for education

loan for studies

abroad which will be

adjusted in the

margin money

Not

Available


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8 Security Upto Rs. 4.00

lacs : No

Security

Above Rs. 4.00

lacs :

Collateral

Security of

Suitable value

(equivalent to

100% of the

amount of loan)

or co-obligation

of parents /

guardian / third

party.

Upto Rs. 4.00

lacs : No Security

Above Rs. 4.00 lacs

to Rs. 7.50 lacs :

Third Party

Guarantee

Above Rs. 7.50 lacs

to Rs. 10

lacs(India) :

Tangible Collateral

security for full

value of loan

Above Rs. 7.50 lacs

to Rs. 15

lacs(Abroad) :

Rs 15 lacs to Rs. 20

lacs (Abroad) :

Tangible Collateral

security for full

value of loan

Not

Available

QuestionnaireI, Chintaman Sankhala pursing M.B.A. from Sanghvi Institueof Management Science, Indore is undertaking a research onthe topic A Comparative Study of Professional &Traditional Programs Students Perception towardsEducational loan schemes regarding the same feedback


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is required from you which will be used strictly for academicresearch purpose only.

Questionnaire (please tick on the appropriate box to mark yourresponse)

Name________________________________________________________________Age ______

Gender Male Female

Pursuing M.B.A. B.E. B. Com.B.B.A.Family Income

Below 1, 00,000 per year

Rs. 1, 00,000 to Rs. 3, 00,000 per year

Rs. 3, 00,000 to Rs. 5, 00,000 per year

Above Rs. 500,000 per year

Que. 1 Have you ever acquired Educational Loan.

Yes No

Que. 2 Are you aware about the Educational Loans available in the

country?

Yes No

Que. 3 Which bank will you prefer for your educational loan

requirement?

State Bank of India (S.B.I.)

Punjab National Bank (P.N.B.)

Hong-Kong Shanghai Banking Corporation (H.S.B.C.)

Others _________________________________ (please specify)

Que. 4 Educational loans are preferred source of financing educationalfund requirement because

Interest rates charged on these loans is lesser

Educational loans are easily available

Repayment of such loans is not difficult

There is no other source of funds available to fund educational

expenses


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SerialNo. Statement

StonglyAgree Agree

NotSure

Disagree

StronglyAgree

1

Educational loans available frompublic banks are moreeconomical than those availablefrom private banks.

2

Educational loans of public

banks are more reliable thanthose of private banks.

3

Accquiring educational loan frompublic bank is much easier thanfrom private bank.

4

Educational loan schemes ofpublic banks are much flexiblethan the schemes of publicbanks.

5

Educational loan schemes ofpublic banks are much clear and

concise than the schemes ofpublic banks.

6

Private banks require highersecuritythan public banks while givingeducational loans.

7

Attitude of public banks is muchbetter than that of private bankswhile accquiring educationalloan.

8

Objective of private banks'

educational loan scheme is tomaximise profit.

9

Objective of public banks'educational loan scheme is tomaximise national and socialdevelopment.

10

Beneficiaries of the privatebanks' educational loan schemesare mainly economically affluentclasses.

11

Beneficiaries of the private

banks' educational loan schemesare mainly economically weakerclasses.

12

Interest rates of private banksare much higher than those ofpublic banks

13

Documentation charges ofprivate banks are higher thanthose of public banks

14

Acquiring educational loan frompublic bank is much timeconsuming than from privatebank.


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Thank you...............

Conclusion

On the basis of above findings and comparison among PNB,

SBI and HSBC it is clearly observe that public banks have

more reach, variety and flexibility in their education loan

schemes whereas private banks uses some new concepts in

their offerings like tailor made repayment system.

Maximum loan for studies in India is ranging from Rs. 7.50

lacs to 10.00 lacs and for studies in Abroad it is Rs. 15-20

lacs by public banks and in the case of private banks, they

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

lacs. Interest rates are vary from 9.5% to 11.5% p.a and PNB

uses PTLR system. All banks have same repayment facility

i.e. one year after completion of course or 6 months after

securing a job, whichever is earlier.

Repayment period is also vary from 5-7 year after

commencement of repayment in the case of education loan

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

unsecured and secured education loan taken from private

banks.

Margin is same in PNB and SBI i.e.

Up to Rs. 4.00 lacs : Nil

Above Rs. 4.00 lacs : Studies in India5%


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Studies in Abroad 15%

PNB and SBI do not charge any processing fees but SBI takes

Deposit of Rs. 5000/-for education loan for studies abroad

which will be adjusted in the margin money

RECOMMENDATIONS

Banks should go for advertisement Campaign from

Scratch.

Banks should try to cash its brand image.

Strong branch network should be made and staff

personnels incentives should be increased.

Banks should increase its product line in education

loans.

Special scheme for non-professional students as well

as for professional students should be increased.

Banks should introduce some new model keeping in

mind the loan suitable for medium income group

customer.

References

BIBILIOGRAPHYBooks:-

Indian Financial System and Commercial (page no. 259)

Management of Indian Financial - R.L.Gupta


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Websites:-

www.pnbindia.com

www.statebankofindia.com

www.hsbc.com
http://www.pnbindia.com/http://www.statebankofindia.com/http://www.hsbc.com/http://www.pnbindia.com/http://www.statebankofindia.com/http://www.hsbc.com/

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Chintaman Sankhala Final Mrp