PUNJAB NATIONAL BANK

A

FINAL PROJECT REPORT

ON

COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE TO SBI, PNB AND HSBC

SUBMITTED BY:

POONAM BALASEMESTER: MBA IVthENROLLMENT NUMBER: 80901317035

MALOUT INSTITUTE OF MANAGEMENT & INFORMATION TECHNOLOGYMALOUT, MUKTSAR 152107PUNJABBATCH (2008-2010)

Declaration by the Candidate

I POONAM BALA, student of MBA IV of Malout Institute of Management & Information Technology, Malout (2008-10) bearing enrollment number 80301317035 hereby declare that the research project report titled COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE TO STATE BANK OF INDIA (SBI), PUNJAB NATIONAL BANK (PNB) AND HSBC.

Is the outcome of my own work and same has not been submitted to any university/ institutions for the award of any degree or any professional diploma.

Date:

( )

Sign of candidate

ACKNOWLEDGEMENT

Appreciation can make a day, even change a life. Your willingness to put it into words is all that is necessary.

It has been a great learning experience on this project entitled Comparative Study of Education Loan With Reference TO SBI, PNB, And HSBC.

I would take this opportunity to express my sincere accolade to my faculty guide, Mrs. Rajinder Kaur Maam, for facilitating me at various phases of the project. Despite his demanding schedule, he bestowed every possible support to me, so as to carry on the project work without any hindrance.

Last but not the least; I thank my parents and teachers for bringing me up in a successful environment and teaching me all the basic etiquettes and ethics required for my growth in an organization

Table of Content

1. Introduction of Education Loan

2. Research Methodology

3. PNB Education Loan Scheme

4. SBI Education Loan Scheme

5. HSBC Education Loan Scheme

6. Findings

7. Conclusion

8. Recommendations

9. Appendix

10. Bibliography

INTRODUCTION

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 endeavors 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.

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.

Education loans can augment the boundaries of what you can achieve Education never ends it is not said without reason. We are educated all our lives and getting an education not only is a great achievement but something that gives you the tools to find your own way in the world. Education is indispensable; little do we realize how much more it can bring to us in terms of worldly amplifications. Anyone can have propensity and the natural endowment for education. But one might not have the resources to finance their education. Loans for education you have never thought about it as a feasible arrangement. Education loans can open newer panoramas in regard to your education aspirations.

An extensive range of student and parent loans are presented under the category of education loans. There are many types of education loans. Discerning about the types of education loans will help you in making the accurate decision. The single largest resource of education loans is federal loan. The two main federal education loan programs are the Federal Family Education Loan Program and the Federal Direct Loan Program. In the Federal Family Education Loan Program the bank, credit union or the school is the lender. While the federal direct loans program, the department of education is the lender.

Private education loans are offered to people so that they can provide financial backup to their education plans. Private education loans are not endorsed by other government agencies but are provided by other financial institutions. Private education loans program are optimum for both undergraduate and graduate studies.

Education loans can provide funding for tuition fees, board and room, books computer, and even student travel. An education loan can help you with all these expenses. Education loans are sufficient enough to take care of all these expenses. If you have been forced to drop your education for any reason, you can still take up your education at any point of time. Irrespective of your age and also where you have left your education.

There are no specific eligibility criteria for education loans. Any person who is in need of sponsorship for education can find an education loan that befits his or her financial necessity. Loan amount on education loans vary with the kind of education you want to pursue. The repayment options with education loans will similarly accommodate your personal financial preferences. You can either repay interest amount while still in school or six months after graduation. Education loans offer up to ten years for repayments. The refund alternatives on education loans also include deferment, forbearance and consolidation. Education loans will help you in planning your life after graduation. However, an education loan like every loan is a huge financial obligation. Education is an experience of life. It is so rewarding in itself that it helps you to manage almost everything in your life. Education loans discipline your impulse towards education and training into a fruitful contrivance. The payoff is delicious in terms of improved quality of life. Education is expensive! Is it? With education loans it cant be. Now, you dont have to take the road in front of you. Make your own road with education loans.OBJECTIVES1. To know the banks criteria of providing education loan to the students for higher studies in India or Abroad.2. To know which banks are providing supporting educational loan scheme to students?3. To know the hindrances in the way of education loanRESEARCH METHODOLOGY

PROJECT TITLE: Comparative Study of Education Loan with Reference to PNB, SBI and HSBC.

To compare education loan schemes & policies of the Punjab National Bank (PNB), State Bank of India (SBI) and Hong-Kong Shanghai Banking Corporation (HSBC)

METHODOLOGY:

In this research I have adopt the Exploratory Research method only for PNB, SBI and HSBC Education loan schemes for just compare the offer document of these three banks.

DATA SOURCE:

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).

SAMPLE SIZE

SAMPLE UNIT:- Malout cityLIMITATIONS:

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.

PNB EDUCATION LOAN SCHEMES

Punjab National Bank is now offering concession in interest in education Loan Scheme. The concession in interest rates is available to new borrowers who will avail education loan from the bank w.e.f. 01.04.2007.

The bank has taken this step to make education loan scheme more customer friendly thus facilitating aspirant students to avail education loan on comfortable & affordable terms. .

Further, Interest is charged monthly on simple basis during the repayment holiday/moratorium period & concession of 1% in rate of interest is also allowed provided the same is serviced regularly during study period.

Punjab National Bank has tied up with Kotak Mahindra Insurance to provide life insurance cover for education loan borrowers.

The insurance would cover study period as well as repayment period, he said, adding in case of any mishap, the insurance company would take care of the loan repayment rather than the aggrieved parents.

VIDYA LAKSHYAPURTI EDUCATION LOAN SCHEME

1. OBJECTIVE

1. To provide financial support to deserving / meritorious students for pursuing education in India and abroad. 2. To providing financial assistance to meritorious students with an opportunity including undertaking basic education and to the meritorious students to pursue higher, professional and technical education.

3. No deserving student is denied an opportunity to pursue higher education for want of financial support.

2. ELIGIBILITY

2(i)Courses eligible

a) Studies in India School Education including Plus 2 stage

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

Post Graduation courses : Masters & Ph.D.

Professional courses : Engineering, Medical , Agriculture, Veterinary, Law, Dental, Management, Computer etc.

Computer Certificate courses of reputed institutes accredited to Department of Electronics or institutes affiliated to University

Courses like ICWA, CA, CFA etc.

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

Courses offered in India by reputed foreign University.

Evening Courses of approved Institutes.

Other Courses leading to Diploma / Degree etc. conducted by Colleges / Universities approved by UGC / Govt. / AICTE / AIBMS / ICMR etc.

Courses offered by National Institutes and other reputed Private Institutes.

b) Studies abroad

Graduation For job oriented professional / technical courses offered by reputed universities. Credentials of the Educational Institution may be got certified from authenticated sources / Embassy in India.

Post Graduation MCA, MBA, MS etc.

Courses conducted by CIMA London, CPA in USA etc.

2(ii)Student eligibility

Should be an Indian National

Secured admission to Professional / Technical courses through Entrance Test / Selection process.

Secured admission to foreign University / Institutions.

Student should have secured pass marks in the qualifying Examination for admission to Graduation Courses.

2(iii)Expenses considered for Loan

Fee payable to Collage / School / Hostel.

Examination / Library / Laboratory fee.

Purchase of books / equipments / instruments / uniforms.

Caution Deposit / Building Fund / Refundable Deposit supported by Institution Bills / Receipts.

Travel Expenses / Passage money for studies abroad.

Purchase of computers essential for completion of the Course.

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

3. QUANTUM OF FINANCE

Need based finance, subject to repaying capacity of the parents / students with margin and the following ceilings :-

Studies in India - Maximum Rs. 7.50 lacs.

Studies abroad -Maximum Rs. 15.00 lacs.

4. MARGIN

Upto Rs. 4.00 lacs

:Nil

Above Rs. 4.00 lacs

:Studies in India5%

Studies in Abroad15%

Scholarship / assistantship to be included in Margin.

Margin may be brought in on year-to-year basis as and when disbursements are made on a pro-rata basis.5. SECURITY

No Security may be insisted upon for loans upto Rs. 4.00 lacs. However, for loans above Rs. 4.00 lacs, Collateral Security of Suitable value (atleast equal to loan amount) or co-obligation of parents / guardian / third party alongwith assignment of future income of the student for payment of instalment may be obtained viz., :-

Upto Rs. 4.00 lacs

:No Security.

Above Rs. 4.00 lacs:Collateral Security of Suitable value

(equivalent to 100% of the amount of loan)

or co-obligation of parents / guardian / third

party.

In addition to above assignment of future income of the student for payment of instalments (stands included in the Agreement).

NOTE :

The document should be executed by both the student and the parent / guardian. The security can be in the form of land / building / Govt. Securities / Public Sector Bonds / Units of UTI, NSC, KVP, LIC Policy, Gold, Shares / Debentures, Bank Deposit in the name of the student parent / guardian or any other third party with suitable Margin. Wherever the land / building is already mortgaged, the unencumbered portion can be taken as security an II charge basis provided it covers the required Loan amount. In case the loan is given for purchase of Computer, the same to be Hypothecated to the Bank.6. RATE OF INTEREST

Upto Rs.4.00 lacs

PTLR

Above Rs.4.00 lacs

PTLR + 1%

The interest to be debited monthly on simple basis during the Repayment holiday / Moratorium period.

Penal interest @ 2% be charged for above Rs. 2.00 lacs for the overdue amount and overdue period.

7. LOANING POWERS

As per loaning Power Chart in force from time to time .No application for educational loan received should be rejected without the concurrence of the next higher authority.

8.REPAYMENT

Repayment Holiday / MoratoriumCourse period + 1 year OR 6 months after getting job, whichever is earlier.

-

The loan is to be repaid in 5-7 years after commencement of repayment. If the student is not able to complete the course within the scheduled time, extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course.

The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Instalments (EMI) be fixed.

1% Interest concession may be provided by Incumbents to lonees if the interest is serviced by them during the study period when repayment holiday is specified for interest / repayment under the Scheme.

Interest concession is to be provided to borrowers only at the time of final repayment of the loan.9. POST SANCTION FOLLOW UP

Branches to contact college / university authorities to send the progress report at regular intervals in respect of students who have availed loans.10. UPFRONT FEE

NIL

11.TIME NORMS

Loan applications have to be disposed of within a period of 15 days to one month but not exceeding the time norm stipulated for disposing of loan applications under Priority Sector Lending.10. CAPABILITY CERTIFICATE

Since, some of the foreign universities require the students to submit a certificate from their bankers about the sponsors solvency / financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies, capability certificate may be issued in such cases. For this financial and other supporting documents may be obtained from the applicant.

11. LOAN APPLICATION

Form No. PNB 813.

12. MODE OF APPLICATION OF INTEREST

Interest on Education Loan accounts shall be worked out at the end of each month and recorded on a separate sheet in the ledger but not debited to the borrowers account. Instead, it should be debited to a separate account opened in the Subsidiary General ledger titled Interest Accrued on Advances under Education Loan Scheme forming one of the components of the main head of General Ledger. Interest Accrued on Advances and credited to Revenue Head Income Interest on term loan till the commencement of repayment of first instalment. On the date fixed for commencement of repayment, the whole amount of interest so far worked out and recorded as above should be debited to the borrowers account by corresponding credit to the Interest Accrued on Advances under Education Loan Scheme. Repayment of loan and interest may be determined keeping in view the above procedure for charging of interest.

13. CONFIDENTIAL REPORTS

On Borrower(s): No confidential report on the borrower will be required as the application for loan will indicate the information required to be furnished in the confidential report.

On Guarantor(s) / Co-obligants: Form No. PNB 905 /282(C).14. DOCUMENTATION

i) Agreement (Annexure -1) duly stamped, to be taken in case where the student is minor. Further, in case of Minor student, on attaining his/her majority confirmation from student be obtained as per Annexure III.

ii) Agreement (Annexure II) duly stamped , to be taken in case where the student is Major.

iii) Letter of Guarantee (PNB 785) duly stamped as an Agreement to be taken in case of loan amount is above Rs. 4 lacs.

iv) In case of collateral security is to be taken is mortgage, procedure given in Book of Instruction on Loans to be followed.

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

15. DISBURSEMENTEducation loan is to be disbursed in the form of term loan. A limit upto which advance is to be allowed during each year will be set up. Each time the borrowing scholar is in need of funds to pursue his studies; he will approach the lending office and will explain his needs to the Incumbents Incharge will permit drawing on the borrowers account within the limit fixed. This will also enable the Incumbent In charge to remain in close touch with the borrowing studentss activities.

The loan to be disbursed in stages as per the requirement / demand directly to the Institutions / Vendors of Books / equipments / instruments to the extent possible.

LOAN TO BE SANCTIONED BY THE BRANCH NEAREST TO THE PLACE OF DOMICILE OF THE STUDENT.

In case of , purchase of stationary and books, loan may be disbursed in cash on declaration by the applicant and production of bills.

16. CLASSIFICATION

Advances allowed under the Scheme will be classified under Priority Sector.17. CHECK LIST

To facilitate expeditious disposal of applications, a check-list regarding documents, security etc. alongwith application forms for Education Loans be provided to intending borrowers. An illustrative check-list enabling a ready reference, so that intending borrowers can furnish all related documents / papers in one lot, is given below :-

Loan application on Banks format.

Passport size photograph.

Proof of Address.

Proof of having secured pass marks in last qualifying examination.

Letter of admission in professional, technical or vocational courses.

Prospectus of the course wherein charges like Admission Fee, Examination Fee, Hostel Charges etc. are mentioned.

Details of Assets & Liabilities of parents.

In case loan amount is above Rs. 4.00 lacs :

Particulars of Guarantors and details of their Assets & Liabilities.

If immovable property offered as Collateral Security copy of Title Deed, Valuation Certificate and Non-encumberance Certificate from approved Lawyer of the Bank.

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

Any other document / information, depending upon the case and purpose of the loan.

18. POST SANCTION SUPERVISION

The Bank will reserve the right of giving loan under this Scheme to any scholar or continue / discontinue the yearly disbursement to a borrower under the Scheme, depending upon whether or not he / she shows good results at the institution he /she has joined for studies and whether of not reports about his / her conduct are satisfactory.

Such reports will be required to be produced to the Incumbents Incharge of the lending office before the start of each academic year subsequent to the first year.

Loan pass book (PNB589) be issued to the borrower containing details such as date of sanction of loan, amount of loan, amount of loan sanctioned, subsidy received (if any) rate of interest, amount due under each instalment, due date of instalment etc.

19. OTHER CONDITIONS

Zonal Managers and above may consider relaxation with regard to Eligibility, Margin and Security norms on merits of each case.

No Due Certificate need not be insisted upon as a pre-condition for considering educational loan. However, Branches may obtain a declaration / an affidavit confirming that no loans are availed from banks.

STATE BANK OF INDIA (SBI) EDUCATION LOAN

SBI EDUCATION LOAN

A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.1.ELIGIBLE COURSES All courses having employment prospects are eligible.

Graduation courses/ Post graduation courses/ Professional courses

Other coursesapproved by UGC/Government/AICTE etc.

2.

Fees payable to college/school/hostel

Examination/Library/Laboratory fees

Purchase of Books/Equipment/Instruments/Uniforms

Caution Deposit/Building Fund/Refundable Deposit

Travel Expenses/Passage money for studies abroad

Purchase of computers considered necessary for completion of course

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

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

3.AMOUNT OF LOAN For studies in India, maximum Rs. 10 lacs

Studies abroad, maximum Rs. 20 lacs4.INTEREST RATE

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

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

No processing fee/ upfront charges

Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in the margin money

Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier. Place of StudyLoan AmountRepayment Period in Years

In IndiaUp to Rs. 7.5 lacs5-7

Above Rs. 7.5 lacs5-10

AbroadUp to Rs. 15 lacs5-7

Above Rs. 15 lacs5-10

AmountStudies In IndiaStudies Abroad

Upto Rs. 4 lacsNo SecurityNo Security

Above Rs. 4 lacs to Rs. 7.50 lacsThird Party GuaranteeThird Party Guarantee

Above Rs. 7.50 lacs to Rs. 10 lacs(India)/ Rs. 15 lacs(Abroad)Tangible Collateral security for full value of loanTangible Collateral security of suitable value of loan or third party guarantee

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

7.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%8.

Completed Education Loan Application Form.

Mark sheets of last qualifying examination

Proof of admission scholarship, studentship etc

Schedule of expenses for the specified course

2 passport size photographs

Borrower's Bank account statement for the last six months

Income tax assessment order, of last 2 years

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

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

* Conditions Apply EDUCATION LOAN SCHEME FOR STUDENTS OF ISB

Loan amountUpto 95% of all costs upto a maximum of Rs.14.50 lac. (Taking into account expenditure of married students and cost of a laptop, which is essential for students.)

Margin5%

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

8.5% (Floating), if tangible security equivalent to 50% of loan amount is furnished. EMI*: Rs.1260/- per lac.

Should a tangible collateral security equivalent to 50% of outstanding loan amount be furnished midway through the tenure of the loan, the concession of 50 basis points in the rate of interest shall become applicable from the month following the month in which such security is furnished.

Only Simple Interest will be charged during the course and moratorium period.

The rate of interest will not change during the complete tenure of the loan.

Interest is calculated on daily reducing balance.EMI of 9 years & 9 months

RepaymentUp to 10 years. A customised repayment schedule taking into account individual repayment capacity of the student is permissible.

Moratorium PeriodUp to 3 months after completion of course.

Co-borrowerYes. The loan will be granted jointly with the parent/ guardian.

Security Lien on the original Certificate and Marks Sheet of the student. The Certificate will remain in custody of SBI during the currency of the loan.

Third party guarantee (TPG), preferably of earning sibling of the student or a person known to the Bank i.e., a person who is our customer or he/she is a reputed person or a guarantor of one of our borrowers.

Application Processing TimeLoans will be sanctioned and disbursed within three days, after submission of application form, complete in all respects except where mortgage of immovable property is to be created.

Processing Fees/ Prepayment Charges Foreclosure ChargesNil.

Takeover of Education Loan from other Banks/ Financial Institutions for existing students and alumniPermissible

Contact BranchHyderabad University Campus Branch,Gachibowli, Hyderabad- 500019Telephone: 040-23011301/289Fax: 040-23011617

Documents to be enclosedi.Mark sheet of last qualifying examination for school and graduate studies in India.ii.Copies of letter conferring scholarship, freeship, studentship etc.iii.Documents evidencing the duration of course and commencement thereof viz. prospectus or certificate from the competent authority of the institution.iv.Proof of admission to the course.v.Schedule of expenses for the course.vi.Two copies of passport size photograph of the borrower(s) / guarantor(s).vii.Statement of Bank account for the last six months of the borrower(s)viii.Signature identification from bankers of borrower(s) guarantor(s).ix.A copy of Passport/Voters ID Card/Proof of residence.For salaried personsi.Latest salary slip showing all deductions.ii.Employment details for the last 5 years.iii.Latest TDS Certificate Form 16.iv.Statement of assets and outstanding liabilities.For Self-Employed/Professionals and Businessmen Proof of income. Income Tax/Wealth Tax (if applicable) assessment orders not more than 2 years old. Assets and Liabilities.If Collateral Security is Mortgage of Landed Property Original Sale Deed Original receipt of payment made for registrar Society share certificate Non encumbrance or certificate from advocate Valuation Report

Bank NameTypeRateProcessing FeesPre-Paid Charges

72 Punjab National Bank Fixed 1 INDIA :- upto 4 lakhs 11%, > 4 lakhs 11.75% ; ABROAD :- upto 4 lakhs 11%, > 4 lakhs 11.75% 69 INDIA :- 0 ; ABROAD :- 0

NA

73 State Bank of India Fixed 1 INDIA :- upto 4 lakhs 11.5%, 4-7.5 lakhs 11.25%; > 7.5 lakhs 11% ; ABROAD :- upto 4 lakhs 11.5%, 4-7.5 lakhs 11.25%; > 7.5 lakhs 11% 81 INDIA :- 0 ; ABROAD :- 0

NA

HSBC

EDUCATION LOAN SCHEAMESEducational Loan

Education is the greatest asset anyone can have. Recognizing this, HSBC, in affiliation with Global Student Loan Corporation (GSLC) has designed a student education loan program to provide funding for students who are seeking to attain a world-class education at a U.S college or university.HSBC India Student Education Loan Program can help ease students' financial concerns as they embark on one of the biggest decisions in their life attending the college / university of their dreams. The program enables you to borrow funds to cover the cost of education tuition, fees, room charges, boarding, books, and other education-related expenses.

Global Student Loan Corporation - GSLC - is one of the leading organizations which enables non - U.S. students to find the path to a world-class education. With GSLC, you can access a student-specific Loan Certificate demonstrating adequate funding to attend school - a requirement for securing a U.S student visa. You can receive advice from GSLC's International Student Planner and remain at ease knowing that GSLC has extensive relationships with many U.S colleges and universities. You will also be able to use GSLC's Budget Calculator to calculate how much will be needed towards funding your studies and receive guidance about budgeting for school.

FEATURES AND BENEFITS

Get financial flexibility with HSBC educational loans LOAN AVAILABILITY

Educational loans are available for studies in India or abroad. Avail of loan amounts ranging from a minimum of Rs. 50,000 to a maximum of Rs. 25,00,000*. SMOOTH REPAYMENT

Our Equated Monthly Installments (EMIs) scheme allows for easy repayment and saves you from hassles.

Flexibility

Our loans are tailor-made to your needs. Opt for tenures up to 4 years for unsecured loans and 7 years for secured loans (against security of a residential property / shares). COMPREHENSIVE COVERAGE

Educational loan also covers expenses for boarding and lodging.

HSBC banking benefits

Take advantage of HSBC's banking benefits; let us help you open a Savings account or avail of a debit card. LOW INTEREST RATES

Bank offer you competitive interest rates on your educational loans. Bank also give you the option of choosing between a fixed or floating rate of interest (the floating rate option is available only in case of secured loans).

Special Relationship Discounts

You are also eligible for special discounts exclusively designed for HSBC customers (of 6 months or more).

* Loans above Rs.500,000 are available against security of residential property/shares. Loans to value ratio to be less than or equal to 50% of the property valuation.

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

The interest rate on your floating rate Home loan is linked to HSBC's Mortgage Lending Rate (MLR) and any revision in the MLR would impact your interest rate. The MLR is currently 9.5%.

Terms and conditions apply. All loans at the sole discretion of The Hongkong and Shanghai Banking Corporation Limited, India. Loans available for applicants and properties in and around the limits of cities where HSBC has branches and is subject to change from time to time.

Please be advised that vide Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a service tax of 10% + 2% education cess thereon will be applicable on our fees and charges. ELIGIBILITY

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

1Applicant should be a resident Indian

2Minimum net annual income of Rs 150,000 for secured loan and Rs 75,000 for unsecured loan

3Student must have secured admission to a recognised college/university in India or abroad*

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

The interest rate on your floating rate Home loan is linked to HSBC's Mortgage Lending Rate (MLR) and any revision in the MLR would impact your interest rate. The MLR is currently 9.5%.

Terms and conditions apply. All loans at the sole discretion of The Hongkong and Shanghai Banking Corporation Limited, India. Loans available for applicants and properties in and around the limits of cities where HSBC has branches.

Vide Finance (No.2) Act 2004, w.e.f. 10 Sep 2004, a service tax of 10% + 2% education cess thereon will be applicable on our fees and charges.

FINDINGS

Sl.

Parameter

Private Banks

Public Banks

No.

1.

Beneficiaries

Economically Economically affluents 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

COMPARATIVE STUDY OF EDUCATION LOAN WITH REFERENCE TO SBI, PNB & HSBCSl. No.Basis of DifferencePNBSBIHSBC

1Max. loan for studies in IndiaRs. 7.50 LacsRs. 10.00 LacsMin. Rs. 50,000 to a Max. of Rs. 25,00,000

2Max. loan for studies in AbroadRs. 15.00 LacsRs. 20.00 LacsNot Available

3Interest RatesUpto 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

4Repayment Period starts fromone year after completion of course or 6 months after securing a job, whichever is earlier.

one year after completion of course or 6 months after securing a job, whichever is earlier.

Not Available

5Repayment PeriodTo be repaid in 5-7 years after commencement of repaymentIn India : Up to Rs. 7.5 lacs - 5-7 years

Above Rs. 7.5 lacs -5-10 years

In Abroad : Up to Rs. 15 lacs 5-7 years

Above Rs. 15 lacs 5-10 yearsup to 4 years for unsecured loans and 7 years for secured loans (against security of a residential property / shares).

6MarginUpto Rs. 4.00 lacs

:Nil

Above Rs. 4.00 lacs:Studies in India5%

Studies in Abroad15%

Upto Rs. 4.00 lacs

:Nil

Above Rs. 4.00 lacs:Studies in India5%

Studies in Abroad15%

Not Available

7Processing FeesNo 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

8SecurityUpto 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) : Tangible Collateral security of suitable value of loan or third party guarantee

security for full value of loan Not Available

CONCLUSIONOn the basis of above findings and comparison among PNB, SBI and HSBC it is clearly observe that public banks have more reach, variety and flexibility in their education loan schemes whereas private banks uses some new concepts in their offerings like tailor made repayment system.

Maximum loan for studies in India is ranging from Rs. 7.50 lacs to 10.00 lacs and for studies in Abroad it is Rs. 15-20 lacs by public banks and in the case of private banks, they provide minimum Rs. 50,000 to a maximum of Rs. 25,00,000 lacs.

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

All banks have same repayment facility i.e. one year after completion of course or 6 months after securing a job, whichever is earlier.

Repayment period is also vary from 5-7 year after commencement of repayment in the case of education loan is taken from public banks and it is 4-7 years on the basis of unsecured and secured education loan taken from private banks.

Margin is same in PNB and SBI i.e.

Upto Rs. 4.00 lacs

:Nil

Above Rs. 4.00 lacs

:Studies in India5%

Studies in Abroad15%

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.

Presence of some famous personality in Advertisement or in Pamphlets insuring better retention in the mind of customers.

In this age of information, the customer before taking loans collects all the information about various brands. The banks should provide a combined booklet of the product range in order to upgrade the knowledge of future takings of loans.

EDUCATIONAL LOAN APPLICATION FORM FOR HSBC

First Name

Middle Name

Last Name

Address

City

Telephone

Mobile

Email

Date of Birth

HTMLCONTROL Forms.HTML:Select.1

Convenient time to contact you

Between

and

Are you interested in a free session on overseas studies with an Educational Counsellor

Details of the Educational Institute you are planning to study at :

Name

Country

Are you an existing HSBC customer?

HTMLCONTROL Forms.HTML:Select.1

If yes, please provide us the Card No or Account No

Account No.

Credit Card No.

BIBILIOGRAPHY

Books:-

Indian Financial System and Commercial Banking , by IIBF mumbai (page no. 259)

Management of Indian Financial - R.L.Gupta

Websites:-

www.pnbindia.com www.statebankofindia.com www.hsbc.com_1332641326.unknown

_1332641330.unknown

_1332641334.unknown

_1332641336.unknown

_1332641337.unknown

_1332641338.unknown

_1332641335.unknown

_1332641332.unknown

_1332641333.unknown

_1332641331.unknown

_1332641328.unknown

_1332641329.unknown

_1332641327.unknown

_1332641322.unknown

_1332641324.unknown

_1332641325.unknown

_1332641323.unknown

_1332641320.unknown

_1332641321.unknown

_1332641319.unknown