A PROJECT REPORT

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ON EDUCATIONAL LOAN AS A FACILITATING FACTOR FOR HIGHER EDUCATION- A STUIDY AT IOB

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY: N.SWARNALATHA MBA Enrollment No: 1009-10-672-013

NIZAM COLLEGE (AUTONOMOUS) ACCREDITED BY NAAC WITH A GRADE

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A Constituent College of Osmania University with Potential for Excellence BASHEERBAGH, HYDERABAD 500 001
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Nizam College (Autonomous) Constituent College of Osmania University, Basheerbagh, Hyderabad - 500 001. Department of Business Management

This is to certify that Ms. N.SWARNALATHA is a bonafide student of this college, studying M.B.A IV semester bearing Hall Ticket No- 1009-10-672-013.

Coordinator
NIZAM COLLEGE

Principal

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MASTER OF BUSINESS ADMINISTRATION (MBA) HYDERABAD

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DECLARATION I, the undersigned, hereby declare that the project report entitled ON EDUCATIONAL LOAN AS A FACILITATING FACTOR FOR HIGHER EDUCATION-carried out at(INDIAN OVERSEAS BANK ) is my original work written and submitted by me in partial fulfillment of Master`s Degree in Business Administration of (OSMANIA University). I also declare that this project has not been submitted earlier in any other university or institution.

Date:

(Candidate Name)

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ACKNOWLEDGEMENT
I take this opportunity to extend my profound thanks and deep sense of
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gratitude to the authorities of ON EDUCATIONAL LOAN AS A FACILITATING

FACTOR FOR HIGHER EDUCATION for giving me the opportunity to undertake

this project work in their esteemed organization. I profusely thank Mr.RAM GOPAL (CHIEF MANAGER). My sincere thanks to Honorable Principal Mr. NAIDU ASHOK, Head of the Department Mrs. USHA and my project guide Mrs. SARITHA for the kind encouragement and constant support extended in completion of this project work. I am also thankful to all those who have incidentally helped me, through their valued guidance, co-operation and unstinted support during the course of my project.

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CONTENTS Chapter No.

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Chapter Name Introduction 1.2.plan of study a.study in abrod b. study in india 1.3.Objectives a.funding pattern of education loan at iob 1. higher education 2. special education 3. distance education 4. private education 4. employ education 1.4. Methodology a. actual collection of data b. software used for data 1.5. Limitations of study Bank Profile 2.1.details of bank profileProfile Cost sheets Graphical representation of variations in costs

4.

Review of literature 3.1History o loan in india 3.2. General information 3.3. Types of education loan 3.4. Eligibility criteria 3.5. Document required 3.6. Education loan at IOB Analysis and interpretation 4.1. Number of students benefited
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5.

Conclusion and suggestation 5.1. Suggestation 5.2. Conclusion Bibliography

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1.Abstract:
Education assumes significance as a provider of input for economic, political and social development, besides as a source of knowledge. Economic growth in recent years has been based on availability and quality of knowledge in any country, which in turn depends on access and affordability to education. Hence, importance of education has increased to supply adequate and qualitative human capital. Functioning of education sector depends on availability of various resources, of which to a large extent on financial resources. Finances for education are mobilized from different sources like government spending, fees, educational loans, and others. Among these, educational loan has been seen as an alternative way of financing for education. In this background the present paper tries to analyze the trends and patterns of educational loan in India. Further, an attempt has been made to understand pattern of student loans provided by selected commercial banks. The study finds that educational loan is increasing over the years.

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CHAPTER 1

INTRODUCTION

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EDUCATIONAL LOAN AS A FACILITATING FACTOR FOR HIGHER EDUCATION- A STUIDY AT IOB

1.1 INTRODUCTION:

An educational loan is a kind of a monetary support that has to be reimbursed on time. There are various types of loan alternatives which can assist you. Educational loan can be a vital element with your monetary assisting as a whole. It does not matter whether you opt to study at university level, at a college or at a private school, education overall has become expensive and beyond the reach of many. Loan Bazaar allows the students to reimburse the loan slowly and after completion of their graduation. This way the students can give all their attention to the studies and not towards the loan worries. Also, majority of the loans enable the students to postpone or delay the payment of the loan by at least six months after completion of their graduation. This enables the students to get a suitable job and they can pay off their loans with ease. There are various loans that are made by various schools, government and private organizations. Most of them provide very minimal interest price. Some are created on the basis of the needs and some are not. At Loan Bazaar, seeing the fact that there are many students those who are having different requirements and desires, there are a variety of educational loans created suitably for the students, helping them with their monetary issues. Higher education seems out of reach to many these days. To take thousands of dollars as a loan to pay as an education fee seems a scary idea. Also, majority of students are hesitant whether to take up a student loan for further education or not.
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Loan Bazaar provides all the students with educational loans which will aid them by making payments for their education fee and getting a suitable job with a handsome salary and satisfying future prospects. In the professional arena nowadays the basic criteria is the college study. So we provide educational loans that can be a real asset in securing the future of the students.

Education is central to the Human Resources Development and empowerment in any country. National and State level policies are framed to ensure that this basic need of the population is met through appropriate public and private sector initiatives. While government endeavour to provide primary education to all on a universal basis, higher education is progressively moving into the domain of private sector. With a gradual reduction in government subsidies higher education is getting more and more costly and hence the need for institutional funding in this area. The scope of education has widened both in India and abroad covering new courses in diversified areas. Development of human capital is a national priority and it should be the endeavour of all that no deserving student is denied opportunity to pursue higher education for want of financial support. Loans for education should be seen as an investment for economic development and prosperity. Knowledge and information would be the driving force for economic growth in the coming years. 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. We have been receiving enquiries from members seeking clarifications on the various provisions of the scheme based on feed back received from the branches. With a view to ensure that the scheme is implemented in letter and spirit, it was decided to review the scheme and make modifications in the scheme to facilitate smooth operation at bank branches. Towards this, a Working Group of General Managers drawn from select banks was constituted at IBA. This revised model scheme has been prepared based on the suggestions made by the Group.

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PLAN OF STUDY

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1.2.PLAN OF STUDY:
To get admission to the US Universities & to get I-20 for US visa, "Availability of Liquid Funds" to complete the course needs to be demonstrated.Credila's "Education Loan Page | 14 Sanction Letter" before admission can help you show the availability of liquid funds.

a.STUDY IN ABROAD
Students face many challenges while securing education loans. Some of the issues faced by students include: For students going to the USA, UK, Canada, Australia, etc. there are number of activities and formalities which take away the time. Running around from one branch to the other and doing multiple rounds for education loans get very difficult Visa interview deadlines keep approaching fast and the education loan approval letter is required well in time to set up the visa interview. Hence, there is a tremendous time pressure to get education loan in time Flexibility in terms of loans which need to be customized to the requirements of the students and their respective courses Ability to find the required margin money (portion of the fees that is to be paid by students/parents which is not covered by the loan) Required loan amount is more than the value of the collateral security Ability to prove that the University, College and the applied Course is appropriate. (This can be quite challenging if the decision maker is not aware of the thousands of valid and accredited educational choices available in today's fast changing world of education) Ability to repay the loan from the USA Ability to have customer service from the USA with a toll free number Ability to get web-based access to the loan account with web enabled transaction processing inclusive of electronic payments, etc. Credila is a specialized lender for Education Loans. Credila has invested time and resources to set up appropriate systems, processes and knowhow related to the education industry. Credila has numerous databases on education sector. Credila's credit scoring model for the approvals of loans is
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designed specifically for education loans. Credila, therefore, understands problems, challenges and issues faced by the students and their parents. Credila's objective is to work closely with students and parents to try to identify the appropriate education loan programs for them.

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b.Study In India

Students face many challenges while securing education loans. Some of the issues faced by students include: Flexibility in terms of the loans which need to be customized to the requirements of the students and their respective courses Ability to find the required margin money (portion of the fees that is to be paid by students/parents which is not covered by the loan) Required loan amount is more than the value of the collateral security Ability to prove that the University, College and the applied Course is appropriate. (This can be quite challenging if the decision maker is not aware of the thousands of valid and accredited educational choices available in today's fast changing world of education) Ability to get the loan approval letter in time to meet the admission related deadlines Ability to get appropriate customer service during the repayment cycle Ability to get web-based access to the loan account with web enabled transaction processing inclusive of electronic payments, etc. Credila is a specialized lender for education loans. Credila has invested time and resources to set up appropriate systems, processes and know-how related to the education industry. Credila has numerous databases on education sector. Credila's credit scoring model for the approvals of loans is designed specifically for education loans. Credila, therefore, understands problems, challenges and issues faced by the students and their parents. Credila's objective is to work closely with students and parents to try to identify the appropriate education loan programs for them.
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1.3.OBJECTIVES:
1. a. b. c. d. e. 2. Funding pattern of educational loan at IOB for higher education . special education grant for distance education private education loan employ education loan statistical data for 3 yrs

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Statistical data

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1.4.METHODOLOGY:
a. ACTUAL COLLECTION OF DATA

The source used for the collection of data is the primary source.
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b. SOFTWARE USED FOR DATA ANALYSIS

Software like Microsoft Office (EXCEL) was used to draw graphs, tables which were used to show the analysis of the data collected.

1.5 LIMITATIONS OF THE STUDY o Not eligible for distance education, part time course o open universities, for tution fees, bank finance will be available for tution fees, o hotel mess, and living expenses including computer but not for donation, building funds upto 4 lakhs no margin and no security .

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CHAPTER -2
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BANK PROFILE

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2.1.BANK PROFILE:
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STATE BANK OF INDIA

The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921. Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

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Bank of Bengal H.O.

Establishment The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous
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bankers had not spread as a general habit in most parts of India. But, for a long time, and especially up to the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the invertible resources of the banks.
Page | 23 The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.

Group Photograph of Central Board (1921)

Business The business of the banks was initially confined to discounting of bills of exchange or other
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negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly
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no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

Old Bank of Bengal

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Major change in the conditions

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A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India. The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.

Bank of Madras Note Dated 1861 for Rs.10

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Presidency Banks Act

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The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right.

Bank of Madras

The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the
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growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland
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of

the

presidency.

India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas

of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.

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Bank of Bombay

Presidency Banks of Bengal The Presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.

But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank.

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The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of
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maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tendered at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.

The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.

Imperial Bank The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.
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Stamp of Imperial Bank of India

When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.

First Five Year Plan In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking
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over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking
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(Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking sub serving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development The Bank is actively involved since 1973 in non-profit activity called Community Services Banking. All SBI branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes. SBI business is more than banking because we touch the lives of people anywhere in many ways. SBI commitment to nation-building is complete & comprehensive.

TECHNOLOGY UPGRADATION

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SBIs Information Technology Programme aims at achieving efficiency in operations, meeting customer and market expectations and facing competition. SBI achievements are summarized below:
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FULL BRANCH COMPUTERISATION (FCBs): All the branches of the Bank are now fully computerised. This

strategy

has

contributed

to

improvement

in

customer

service.

ATM SERVICES: There are 5290 ATMs on the ATM Network. These ATMs are located in 1721 centers

spread across the length and breadth of the country, thereby creating a truly national network of ATMs with an unparalleled reach. Value added services like ATM locator, payment of fees for college students, multilingual screens, voice over and drawl of cash advance by SBI credit card holders have been introduced.

INTERNET BANKING (INB): This on-line channel enables customers to access their account information

and initiate transactions on a 24x7, boundary less basis. 2225 branches, covering 555 centers are extending INB service to their customers. All functionalities other than Cash and Clearing have been extended to individual retail customers. A separate Internet Banking Module for Corporate customers has been launched and available at 1305 branches. Bulk upload of data for Corporate, Inter-branch funds transfer for Retail customers, Online payment of Customs duty and Govt. tax, Electronic Bill Payment, SMS Alerts, E-Poll, IIT GATE Fee Collection, Off-line Customer Registration Process and Railway Ticket Booking are the new features deployed.

GOVT. BUSINESS : Software has been developed and rolled out at 7785 fully computerised branches.

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Electronic generation of all reports for reporting, settlement and reconciliation of Govt. funds is available.

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STEPS: Under STEPS, the bank's electronic funds transfer system, the Products offered are eTransfer (eT), eRealisation (eR), eDebit (CMP) and ATM reconciliation. STEPS handles payment messages and reconciliation simultaneously.

SEFT: SBI has launched the Special Electronic Fund Transfer (SEFT) Scheme of RBI, to facilitate efficient and expeditious Inter-bank transfer of funds. 241 branches of our Bank in various LHO Centres are participating in the scheme. Security of message transmission has been enhanced.

MICR Centre: MICR Cheque Processing systems are operational at 16 centre viz. Mumbai, New Delhi, Chennai, Kolkata, Vadodara, Surat, Patna, Jabalpur, Gwalior, Jodhpur, Trichur, Calicut, Nasik, Raipur, Bhubaneswar and Dehradun.

Core Banking: The Core Banking Solution provides the state-of-the-art anywhere anytime banking for our

customers. The facility is available at 1012 branches.

Trade Finance : The solution has been implemented, providing efficiency in handling Trade Finance transactions with Internet access to customers and greatly enhances the bank's services to Corporate

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and Commercial Network branches. This new Trade Finance solution, EXIMBILLS, will be implemented at all domestic branches as well as at Foreign offices engaged in trade finance business during the year.

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WAN : The bank has set up a Wide Area Network, known as SBI connect, which provides connectivity to 4819 branches/offices of SBI Group across 385 cities as at 31st March 2008. This network provides across the board benefits by providing nationwide connectivity for its business applications

Directors on the Bank's Central Board as on 31st December 2008

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BOARD OF DIRECTORS

Central Board Of State Bank Of India (As on 1st April 2008)

Page | 35 Sl.No. Name of Director Shri O.P. Bhatt 1. Chairman 2. 3. 4. .5 6. 7. 8. 9. Shri S.K.Bhattacharyya MD & CC&RO Shri Suman Kumar Bery Dr. Ashok Jhunjhunwala Dr. Deva Nand Balodhi Prof. Mohd. Salahuddin Ansari Dr.(Mrs.) Vasantha Bharucha Shri Arun Ramanathan Smt. Shyamala Gopinath 19(b) 19(c) 19(c) 19(d) 19(d) 19(d) 19(e) 19(f) 19(a) Sec. of SBI Act, 1955

ASSOCIATE BANKS

State Bank of India has the following seven Associate Banks (ABs) with controlling interest ranging from 75% to 100%. 1. State Bank of Bikaner and Jaipur (SBBJ) 2. State Bank of Hyderabad (SBH) 3. State Bank of Indore (SBIr) Page 35

4. State Bank of Mysore (SBM) 5. State Bank of Patiala (SBP) 6. State Bank of Saurashtra (SBS) Page | 36 7. State Bank of Travancore (SBT)

As on 31st march, 2008 the financial information of State bank of India is given as under

Financial Details
Capital Borrowings Deposits Investments Advances Profit

RS (in crore)
631.47 51,727.41 5,37,403.94 1,89,301.27 4,16,768.19 6,729.55

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Source : balance sheet and profit and loss accounts schedule of state bank of India from annual reports of year ending 31st march, 2008

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General Shareholder Information

Number of shareholders as on 30.9.2004 was 5.61 lacs. The shareholding pattern was as under.

S SH HA AR RE E H HO OL LD DE ER RS S Reserve Bank of India

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P PE ER RC CE EN NT TA AG GE ES S 59.73 %

Non-residents (FIIs, OCBs, NRIs) Banks, FIs including insurance companies Mutual funds/UTI Page | 38 Domestic companies/private corporate bodies/trusts Resident individuals

19.83 % 6.21 % 6.47 % 1.79 % 5.97 %

5.97% 6.47%1.79% 6.21%

19.83%

59.73%

Reserve Bank of India Non-residents (FIIs, OCBs, NRIs) Banks, FIs including insurance companies Mutual funds/UTI Domestic companies/private corporate bodies/trusts Resident individuals

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MISSION

To retain the Banks Position as the Premier Indian Financial Services Group, with world class standards and significant Global business, committed to excellence in customer, shareholder and employee satisfaction and to play a leading role in the expanding and diversifying financial services sector while continuing emphasis, on its development banking role.

DR. KALAM TALKS ABOUT SBI PLAN AND MISSON

EW DELHI : President A.P.J. Abdul Kalam on Tuesday chalked out a seven-point action plan for the State Bank of India (SBI) while urging the country's premier bank to create a Rs. 5,000crore venture capital fund and hike lending to the farm sector. In his address at the SBI's Bicentennial Celebrations here, Mr. Kalam noted that within the next three years, the bank should raise the credit to the farm and agro-processing sector from 10 to 20 per cent of its total loan disbursal. Agricultural growth, he said, was lagging behind while sectors such as manufacturing and services were showing robust increases. A higher credit disbursal, he said, was essential to hike
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farm growth to over four per cent as it was a vital requirement for increasing the overall Gross Domestic Product growth to 10 per cent. Unveiling his plan, Mr. Kalam asked the SBI to allocate Rs. 5,000 crores as venture capital from 2007-08 for the purposes of funding innovative scientists and technologists for speedier societal Page | 40 transformation. This would include the development of ICT products, software development and software services. The President also advised the bank to create and nurture five rural development projects, on the lines of the bio-fuel project and seaweed project, as it had the potential to provide employment to 50 lakh persons in the rural areas at the least.

Mr. Kalam also asked the SBI to adopt and innovatively fund at least one lakh sick units in the small-scale sector to infuse the latest technology and turn them into profitable ventures. Another sector with great potential, Mr. Kalam said, was medical tourism in which the bank could extend funds at competitive interest rates for setting up corporate hospitals which would also serve the rural areas. Likewise, yet another sector for the bank's participation, he said, was infrastructure development, including provision of 50 million quality houses with basic infrastructure in rural areas in association with state and Central entities. Turning to the plight of villagers caught in the ``vicious cycle of borrowing,'' Mr. Kalam asked the SBI to adopt a ``villager-friendly'' banking system to free them from the clutches of moneylenders. Mr. Kalam also lamented that hassle-free loans were being extended by the SBI to students of only the best engineering colleges, medical colleges and business schools. ``I would request the SBI to examine the possibility of providing loans to students who would like to pursue science and commerce as a career," he said.
Besides, ways should be found to fund the education of those meritorious students who could not get admission to top engineering, medical and B-schools owing to stringent competition, Mr. Kalam said.

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SBI has bagged the awards for Most Preferred Bank and Most preferred brand for home Loan in CNBC Awaaz

SBI is placed at The only 70th in Top 1000 Banks Survey by Banker Magazine, July 2007, (up from 107 last year)

Indian Bank to find a place in the List Fortune 500 Global

Consumer Awards in August 2007

Today, SBI ranked 6th in the Economics Times Cap Market List, (up SBI/SBI CAP is the No.1 Page syndicator Asia
42

No.1 in mergers & Acquisition (31 of Deals 19.8bn)

domestic debt in Pacific

Deals of US $

from 50 last year)

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SBI is No 1 provider of SBI is market Leader

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AGRI Finance and No. 1 in Credit Linking of Rs 9.35 lacs SHGS

Readers digest May 07 Golden Award for being among the two most trusted banks in India

in market

financing SSIs a share of 29%

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Up gradation of ratings by citi group/ Morgan Stanley Moodyss S&P

3rd in the Economic Times brand Equity Ranking Top 50 most trusted Page service 44 brands in the service sector

Business Standard has Awarded the Best Banker of the Year Award to Shri O.P.Bhatt for his initiative to reenergize the Bank

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CNN IBN network 18 has selected shri. O.P.Bhatt as Indian of the Year Business 2007 for showing how a public
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Asian

centre

for

corporate Governance & Sustainability and Indian Merchants Chamber has awarded the Transformational Leader

Page | 46

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CHAIRMAN

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DMD & CCO

DMD (I & MA)

(Located at Hyderabad)

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DMD & CFO

DMD RURAL & AGRI BUSINESS

GROUP

DMD & CDO

DMD CORPORATE STRATEGY & NEW BUSINESS

DMD (IT)

CHIF ECONOMIC ADVISOR

CVO

MD & GE (CB)

MD & GE (NB)

DMD & GE (TRESASURY & MARKETS

DMD & GE (ASSOCIATES &

SUBSIDIARIES

DMD: DEPUTY MANAGING DIRECTOR OFFICER CFO: CHIEF FINANE

CCO: CHIEF CORPORATE

CB: CORE BANKING

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OFFICER NB: NON BANKING

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IB: INTERNATIONAL

BANKING

CHAPTER -3

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Page | 50

REVIEW OF LITERATURE

3.1.HISTORY OF STUDENT LOANS IN INDIA:

Education is the essence of life. To ensure that no deserving student is denied education for want of funds, the government is promoting education loans in a big way. The basic aim or idea behind education loan is to bring education within the reach of students and help them improve their prospects in life. Any student who has secured admission in an institute of repute, whose degree/diploma is recognized by University/Institute affiliated to any Central/State Statutory Body or recognized by AICTE (All India Council of Technical Education) and other institutes of repute, is eligible for educational loan. Education loans cover cost of the school/college fee, hostel expenses, and cost of books and stationery. Apart from this, any other expense required to complete the course can also be considered. The maximum amount of education loan is up to Rs. 7.50 lakh in case of studies in India and Rs 15 lakhs for studying abroad. The sum of money offered is against a third-party guarantee. The third-party guarantee can come from an uncle, neighbor or friend standing guarantee for the full amount of the loan. On an average, an education loan has to be repaid over a period of 5 to 7 years,
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with the provision of a grace period of one year after completion of studies. The loan money has to be repaid within 84 months in equated monthly installments (EMIs), commencing 12 months after course completion or 6 months after getting the job, whichever is earlier. In case of overseas study loan of 7 lakhs or above, the sum of Page | 51 money is usually given against fixed deposits, NSC certificates and property worth the loan amount.

3.2.GENERAL INFORMATION

The exact rate of interest for education loan differs from one bank to the other. However, it usually varies from 10 to 15 percent.

Apart from the fee of the course, a list of other expenses is also covered by education loans. However, the list depends upon the bank from which you are taking the loan.

Education loan can be offered at fixed as well as floating interest rate. The interest is usually charged on a daily or monthly reducing balance.

Generally, nationalized banks have been seen to offer variable interest rates, while private and foreign banks charged fixed interest rates on education loans.

While applying for education loan, you will have to pay a percentage of the loan amount, as processing fee.
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In most of the cases, the entire fee for a course is not financed by the bank. A certain proportion, called margin, has to be paid by the applicant. The margin requirements on education loans are not very rigid, with the average being 5

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percent for studying in India and 15 per cent for abroad.

3.3.TYPES OF EDUCATIONAL LOANS:

We come across several types of educational loans that are more suitable for different types of educational plans Distance educational loan. Education grants. Special education grants. Financial institution loan. Under graduate student loan.

3.4.Eligibility Criteria

The applicant should be an Indian national.

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He/she must have secured admission to professional/technical courses, through entrance test/selection process

He/she should be around 16-26 years of age or any other range specified by the bank.

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He/she should not be a minor. He/she should have a good academic track record. He/she should have parents or guardians with stable source of income. He/she should have secured admission to a recognized university in India or abroad.

3.5. Documents Required

Mark sheet of last qualifying examination for school and graduate studies in India

Proof of admission to the course Schedule of expenses for the course Copies of letter confirming scholarship, if any Copies of foreign exchange permit, if applicable 2 passport size photographs Statement of Bank account for the last six months of borrower/parents Income tax assessment order, not more than 2 years old Brief statement of assets and liabilities of borrower/parents If not an existing bank customer, Proof of Identity and Residence Two passport size photographs
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Student loans in India (popularly known as Education loans) have become a popular method of funding higher education in India with the cost of educational degrees going higher. The spread of self-financing institutions (which has less to no funding from the Page | 54 government) for higher education in fields of engineering, medical and management which has higher fees than their government aided counterparts have encouraged the trend in India. Most large public sector and private sector banks offer educational loans.

The education loan growth rate in public sector banks (PSBs) is witnessing a continuous declining trend. While the number of education loan accounts are increasing, the year-on-year growth rate has been showing a declining trend both in number of accounts as well as in the amount. The total outstanding education loans of PSBs as on March 31, 2011, stood at Rs 43,074 crore in 2,235,532 accounts. The education loan amount was Rs 4,550 crore in 319,337 accounts as on March 31, 2004.

The growth rate in the education loan amount went up by 47.54 per cent and 49.14 per cent in 2005 and 2006, respectively. However, it has seen a continuous decline after that. The growth rate of education loan outstanding amount as on March 31, 2011, went down to 20.90 per cent

As on March 31st No. of accounts 2004 2005 2006 2007 319,337 468,207 679,945 944,397 Amount outstanding 4,550 6,713 10,012 14,283

Year-on-year growth (%) No. of accounts 46.62 45.22 38.89 Amount 47.54 49.14 42.65

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2008 2009 2010 2011

1,246,870 1,603,385 1,928,350 2,235,532

19,817 27,646 35,628 43,074

32.03 28.59 20.26 15.93

38.75 39.51 28.87 20.9

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Source: IBA (PSBs)

Similarly, the growth rate in number of accounts has also fallen from 46.62 per cent at the end of March 2005 to 15.93 per cent at the end of March 2011. At present, the model education loan scheme allows loan up to Rs 10 lakh for students in India and up to Rs 20 lakh for the students studying abroad. For a loan up to Rs 4 lakh, co-obligation of parents is required and for loans above Rs 4 lakh and up to Rs 7.5 lakh, co-obligation of parents together with collateral security in the form of suitable third party guarantee is required. In case of loans above Rs 7.5 lakh, 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 instalments is necessary. The rate of interest for loans up to Rs 4 lakh is BPLR and for loans above Rs 4 lakh, one per cent more than BPLR is charged by the banks.

3.6.EDUCATION LOAN AT INDIAN OVERSEAS BANK: Purpose :

Loan is made available for Graduation/Post graduation/Diploma/Computer education in any recognized State/Central Government/University, professional courses including Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, courses like ICWA, CA, CFA, etc., courses conducted by IIM, IISC, XLRI, NIFT etc, courses offered in India by reputed foreign universities/Evening courses of approved institutes, regular degree/ diploma courses like Aeronautical , Pilot training , shipping etc approved by Director General of Civil Aviation/ shipping if the course is pursued in India. Incase the course is pursued abroad, the institute should be
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recognized by the competent local aviation/ shipping authority. For studies abroad, loans will be made available only for Graduation and Post Graduation Courses offered by Reputed Universities and not for diplomas
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Indian Overseas Bank Provides Education Loan, for eligible Indian students studies in India and Abroad. Indian Overseas Bank Education Loan Interest rates vary depends on the total Loan sanctioned and type of Course. Indian Overseas Bank Provides Education loan of 4 lakhs to 10 lakhs for Indian Education courses of Graduation and Post graduations. For Abroad studies the loan will be up to 20 lakhs. You can have the complete details on Indian Overseas Bank Education loan, Interest rates, Documents required while submitting the application form, Schemes, courses, repayment and eligibility for Indian Overseas Bank Education loan for student to study in India & abroad

Indian Overseas Bank Education loan interest rates, terms and conditions
Indian Overseas Bank Education loan starts form 4 lakhs and the max loan scheme is 10 lakhs for Education in India. And up to 20 lakhs for study abroad. Students, who want to take loan amount of 4 lakhs , no need to give any security. Indian Overseas Bank Education loan re-payment period is 5-7 years. For more than 4 lakhs and up to 7.5 lakhs of Education loan, student have to give third party guarantee to re payment of Education loan along with parents(Third party) Salary documents, Bank balance sheet and other Property proofs. For more than 7.5 lakhs and up to 10 lakhs, Indian Overseas Bank executives will check all necessary documents, according to Indian Overseas Bank Education loan terms and

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conditions to provide loan as per parents future Income and type of course selected by student.
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Up to 20 lakhs education loan(only for foreign studies), students have to submit all documents with proof of admission in college, according to Indian Overseas Bank terms and conditions

Indian Overseas Bank Education loan Interest Rate:

For 4 lakhs of Indian Overseas Bank loan, students have to pay 12.75% per year and the amount of above 4 lakhs and below 7.5 lakhs need to pay 14.00% of interest. Candidates, who got more than 7.5 lakhs and up to 20 lakhs, have to pay interest rate of 13.75% per year. You can have the below chart to get conclusion on Indian Overseas Bank Education loan Interest rate. 4 Lakhs- 12.75% p.a 4 lakhs to 7.5 lakhs- 14.00% p.a Above 7.5 lakh 13.75% p.a

Margin Margin
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For loans upto Rs. 4.00 lakh

Nil

For loans above Rs. 4.00 lakh Studies within India 5%

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For studies abroad 15% Scholarship/assistantship to be included in margin.

SECURITY:

Security For loans upto Rs. 4.00 lakh Co obligation of parents . No security For loans above Rs. 4.00 lakh and up to Rs.7.50 lakh Co obligation of parents together with collateral security in the form of suitable third party guarantee.

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For loans above Rs.7.50 lakh

Co obligation of parents together with tangible collateral security .Collateral security in the form of

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NSC /KVP/ LIC Policy/ Gold/ Shares/Debentures or immovable properties Bank Deposits 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 the purchase of computer , the computer has to be hypothecated to the bank..

Indian Overseas Bank Education Loan courses:

1. Regular Professional and Technical Education courses of Graduation and Postgraduation studies, which are approved by AICTE/UGC/Government of India. 2. Aeronautical, Shipping degree and Diploma courses 3. Teacher Training and Nursing Courses, approved by state government or central govt of India. 4. Job oriented professional courses for abroad studies 4. Degree/Intermediate courses
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Indian Overseas Bank Education Loan covers:

Indian Overseas Bank Education Loan in India and foreign includes College fee,
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exam fee, building fee and other fees like library/lab etc. With this Education loan you can purchase any 2-wheeler. You can have the complete expenses and how this Education loan helps you to study in India and abroad Examination fee Tuition Fee 2-Wheeler/travel expenses Laboratory/Library fees Books and other Equipment charges Purchase Computer/Laptop Insurance Hostel Fee etc

Documents required while applying for Indian Overseas Bank Education loan to study in India and abroad:
Students have to submit the following documents to get Indian Overseas Bank Education loan. Candidates have to fill the Indian Overseas Bank Education loan application form and must include relevant necessary documents of latest last 2 months salary slip of parent and income tax assessment sheet. Student have to attach one set of Education qualification certificates of his/her last studies like 10th class and Intermediate etc. you can have the complete details on Indian Overseas Bank Education loan documents need to submit to approve/get loan. Income Proof-Any either salary slip/other
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 Residency proof Education Certificates of SSC, Intermediate and other necessary, if required.
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Income tax assessment of last 2 years Last 6 months of Bank account balance sheet Latest 2 passport Photo graphs Admissions proof in college Passport/Visa

Repayment: 1. After 1 year completion of course or After 6 months of getting job, whichever is happen earlier? 2. Loan re Payment period is commencement of 5-7 years

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CHAPTER-4.

ANALYSIS AND INTERPRETATION

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No.of student benifited

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ANALYSIS AND INTERPRETATION

93.10INR 20 Apr 2012 Price Change (% chg) Rs-2.30 (-2.41%)Prev Close Rs93.10 Open -Day's High Rs95.50Day's Low Rs92.50 Volume 74,782Avg. Vol 58,127

Page 65

52-wk High Rs164.20 52-wk Low Rs72.85

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IOBK.BO

ABOUT
Indian Overseas Bank (IOB or the Bank) provides various banking services, including saving bank, current accounts, credit facilities and other services. The Bank operates in four segments: treasury, corporate/wholesale banking, retail banking and other banking operations. The Banks services also include personal banking...

BUY/SELL

93.10INR
20 Apr 2012

Page 66

Price Change (% chg)

Rs-2.30 (-2.41%)
Prev Close Page | 67 Rs93.10 Open -Day's High Rs95.50 Day's Low Rs92.50 Volume 74,782 Avg. Vol 58,127 52-wk High Rs164.20 52-wk Low Rs72.85

CONSENSUS RECOMMENDATIONS Company Fiscal Year End Month

Consensus Recommendation

Next Earnings (approx.)

Last Updated

Hold

--

March

21 Apr 2012

ANALYST RECOMMENDATIONS AND REVISIONS 1 Month Ago 2 Month Ago 3 Month Ago

1-5 Linear Scale

Current

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(1) BUY

(2) OUTPERFORM

Page | 68
(3) HOLD 3 3 3 1

(4) UNDERPERFORM

(5) SELL

No Opinion

Mean Rating

2.89

2.89

2.62

2.12

ANALYSIS
Sales and Profit Figures in India Rupee (INR) Earnings and Dividend Figures in India Rupee (INR)
# of Estimates Mean High Low 1 Year

Page 68

Ago

SALES (in millions)

Page | 69
Year Ending Mar-12 9 66,439.20 69,153.00 64,404.00 48,748.50

Year Ending Mar-13

76,457.70

79,542.00

73,538.00

62,450.00

Earnings (per share)

Year Ending Mar-12

11

15.76

25.02

11.50

23.03

Year Ending Mar-13

10

22.57

28.60

15.80

33.50

LT Growth Rate (%)

5.00

5.00

5.00

34.90

HISTORICAL SURPRISES
Sales and Profit Figures in India Rupee (INR) Earnings and Dividend Figures in India Rupee (INR)
Estimates vs Actual Estimate Actual Difference Surprise %

SALES (in millions) Quarter Ending Dec-11 Quarter Ending Sep-11 Quarter Ending Jun-11 Quarter Ending Mar-11 14,645.30 13,871.50 12,845.10 12,485.00 16,326.40 16,935.60 11,876.30 15,997.50 1,681.07 3,064.07 968.83 3,512.50 11.48 22.09 7.54 28.13

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Quarter Ending Dec-10

10,400.50

14,814.10

4,413.56

42.44

Earnings (per share)

Page | 70 Quarter Ending Jun-11

Quarter Ending Mar-11 Quarter Ending Mar-10 Quarter Ending Dec-09 Quarter Ending Sep-09

5.40 5.30 3.20 6.00 5.75

3.32 7.88 2.34 1.87 4.74

2.08 2.58 0.86 4.13 1.01

38.52 48.68 26.88 68.83 17.61

FUTURE ESTIMATES TREND

Sales and Profit Figures in India Rupee (INR) Earnings and Dividend Figures in India Rupee (INR)
Current 1 Week Ago 1 Month Ago 2 Month Ago 1 Year Ago

SALES (in millions)

Year Ending Mar-12

66,439.20

66,439.20

66,503.30

66,503.30

48,748.50

Year Ending Mar-13

76,457.70

76,457.70

76,538.40

76,538.40

62,450.00

Earnings (per share)

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Quarter Ending Mar-12

15.76

15.76

15.82

15.82

23.03

Quarter Ending Mar-13

22.57

22.57

22.65

22.65

33.50

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SUMMARY
Last Week Last 4 Weeks

Number Of Revisions:

Up

Down

Up

Down

Revenue

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Year Ending Mar-12

Year Ending Mar-13

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Earnings

Year Ending Mar-12

Year Ending Mar-13

OVERALL
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Beta: Market Cap (Mil.): Shares Outstanding (Mil.):

1.35 Rs74,200.53 797.00 5.00 5.37

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Dividend: Yield (%): FINANCIALS
IOBK.BO Industry Sector

P/E (TTM): EPS (TTM): ROI: ROE:

5.71 16.31 ---

19.31 -0.00 5.60

35.74 -0.89 5.12

CHAPTER-5

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SUGGESTION AND CONCLUSION

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5.1.SUGGESTIONS FOR EDUCATION LOAN SYSTEM

The educational loan system can be improved by providing a loan with absolutely zero interest. This will help the students to attract more towards higher education. The higher education is the best way to develop the economic strength of our country. Even though there is subsidy provided by central government, the loan at free of interest will be better. This should be done with proper analysis on the economical background of students. Another problem is the misuse of
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educational loans by some people for other purposes. This can be avoided by providing loan directly to the college. In this method, the loan amount will be directly transferred to the college account with full security. This scheme is not always possible due to many reasons. The formalities needed for getting an educational loan should be reduced in a proper way.

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CONCLUSION
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5.2.Conclusion
The educational loan is very much useful for the students. The educational loans are always aims the carrier development of the students. The government is also providing several opportunities for studying in a better atmosphere. This opportunity should be utilized by the students for getting good education in a good educational institution. The students who like to get admission in foreign universities should be very careful in selecting the educational institutions. This because, these students are taking large amount as loan for studying. This loan is available with collateral security only. Hence, a small fault in the selection procedures may lead to lose the future of the student. A proper approach towards the education will bring a great success to everyone. This will greatly influence on the development of our country. The educational loans should be refund by students after getting a job. And moreover, each student will be always thankful to the bank and our country for providing all the facilities for our studies. Finally, you need to hit on the right bank with the right educational loan scheme to suit your needs. Parameters to weigh the
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alternatives are many; as in, whether the bank provides loan for the course you are opting for and if yes, then up to what extent, the margin and security requirements, the rate of interest, proximity of bank to your residence, et al. The discretion is yours after a thorough analysis.
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Annexure BIBLIOGRAPHY

1.Book Referred :

.
2. Daily News Papers : EDUCATION TIMES TIMES OF INDIA ECONOMIC TIMES CAREER CHRONICLE

4. Websites :

www.guide2educationloan.com www.indiaeducation.com www.hindusthanlink.com www.bharatbook.com

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www.indweb.in www.indian overseas bank.com www.iob.in Vidya_jyoth-aspx

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