The bank heads met Union finance Minister Pranab Mukherjee and requested him to show concern to a scheme to insure study loans.
After the meeting a banker told, “The ministry will work out a note and the Indian Banks Association will then take this forward”.
In the meeting the bankers while expressing their concern on educational loans said these loans are becoming the matter of big worry for them so they want a scheme should be formalized to insure such loans.
In the past couple of years some of the banks especially the public sector banks were aggressive in giving education loans but now they are feeling heat, as the job market conditions are still not giving any positive indications of recovery.
A number of banks are worried about an increase in non-performing assets from these loans in the near future.
The main fear of banks is loans taken by students for studying abroad. According to a banker, “There is a concern about whether a person taking a loan and going abroad will be traceable tomorrow. Or a person who has taken a loan without any guarantees and goes away”.
Bankers stated if the government implement the insurance cover scheme for educational loans, then it would be easy for banks to improve lending in this sector.
At present on some home loan schemes there is insurance cover. The bankers added, the premium on such cover can be as much as Rs 25,000 a year for a Rs 15 lakh loan.
Friday, October 30, 2009
Thursday, October 29, 2009
Education loan helpline launched for government schoolchildren
In Chennai a helpline has been launched for the students of class XII so that they can get information on education loans for higher studies. This facility has been launched by the Gandhian Youth for Peace Trust and Rural Development.
A Suresh Anand, managing trustee of the organization informed that most students studying in government schools don’t have any knowledge of formalities and procedures relating to obtaining an education loan. During the launch of the initiative Annand stated, "Students from private schools are aware of the procedures but we want to consolidate the information, especially for students of Class XII. There are 45,000 students in corporation schools across the 10 zones of the city. We want to reach out to all of them".
Former chief education officer (CEO) C Vijayalakshmi will be the in charge of the helpline. She told in 2006 two students had committed suicide during her tenure as CEO of Perambalur district as they were not aware how to approach the bank manager for a loan. She added, "These students are able to bag ranks and get certificates but lack communication skills. Also, they lack the self-confidence to repay the loan and think they cannot find a suitable job to do so. We want to help them and clear their doubts".
A Suresh Anand, managing trustee of the organization informed that most students studying in government schools don’t have any knowledge of formalities and procedures relating to obtaining an education loan. During the launch of the initiative Annand stated, "Students from private schools are aware of the procedures but we want to consolidate the information, especially for students of Class XII. There are 45,000 students in corporation schools across the 10 zones of the city. We want to reach out to all of them".
Former chief education officer (CEO) C Vijayalakshmi will be the in charge of the helpline. She told in 2006 two students had committed suicide during her tenure as CEO of Perambalur district as they were not aware how to approach the bank manager for a loan. She added, "These students are able to bag ranks and get certificates but lack communication skills. Also, they lack the self-confidence to repay the loan and think they cannot find a suitable job to do so. We want to help them and clear their doubts".
Wednesday, October 21, 2009
Indian students spirits are high, approaching banks for education loan to fund studies abroad
Although the job options in West might be bleak but the spirits of Indian students are high they are approaching banks for education loan to fund their studies abroad.
This year the Indian students are taking loans of higher amount in comparison to those disbursed in the past. Moreover the students have changed their move, now they are opting for courses beyond the traditional geographies like the US and UK and also have widen their choice of courses.
The banks also claim that this year there has been increase in the overseas loan applications as against what they used to get before slowdown. The banks pointed out this year most of the students have applied for loans of higher amount than the maximum limit sanctioned by the banks themselves. an official, from the corporate office of Syndicate Bank said, “Previously a large number of foreign study loans used to be with the Rs 7.5 lakh range. Now the demand seems to have gone up to Rs 20-25 lakh and occasionally even Rs 30 lakh, which is beyond the bank’s maximum limit of Rs 20 lakh”.
Looking at the changing trend in the market, about a year ago the Oriental Bank of Commerce (OBC) had raised its maximum limit for overseas education loans from 15 lakh to Rs 20 lakh about a year ago.
Recently the State Bank of India, the largest education loan lender has slashed interest rates for education loans, sanctioned between May and September this year.
The bankers informed this year many Indian students are showing interest in countries like Australia and New Zealand, which are slightly cheaper as against the established education hub like the US. According to Syndicate Bank sources in terms of number of loans disbursed most of the students had applied for Australia, while in terms of size largest loans were disbursed for education in the US.
However there are some programs for which banks are taking caution while sanctioning loans. SC Sinha, executive director of Syndicate Bank pointed out, “Banks have been cautious of lending for pilot courses as well as air hostess training courses”.
Most of the banks said in spite of bleak employment situation in banking and financial institutions in the West, they are still giving loans for foreign degrees in finance and management. The Syndicate bank official maintained that although there have been no change in policy in terms of lending, then also banks are taking usual precautions in sanctioning education loans.
This year the Indian students are taking loans of higher amount in comparison to those disbursed in the past. Moreover the students have changed their move, now they are opting for courses beyond the traditional geographies like the US and UK and also have widen their choice of courses.
The banks also claim that this year there has been increase in the overseas loan applications as against what they used to get before slowdown. The banks pointed out this year most of the students have applied for loans of higher amount than the maximum limit sanctioned by the banks themselves. an official, from the corporate office of Syndicate Bank said, “Previously a large number of foreign study loans used to be with the Rs 7.5 lakh range. Now the demand seems to have gone up to Rs 20-25 lakh and occasionally even Rs 30 lakh, which is beyond the bank’s maximum limit of Rs 20 lakh”.
Looking at the changing trend in the market, about a year ago the Oriental Bank of Commerce (OBC) had raised its maximum limit for overseas education loans from 15 lakh to Rs 20 lakh about a year ago.
Recently the State Bank of India, the largest education loan lender has slashed interest rates for education loans, sanctioned between May and September this year.
The bankers informed this year many Indian students are showing interest in countries like Australia and New Zealand, which are slightly cheaper as against the established education hub like the US. According to Syndicate Bank sources in terms of number of loans disbursed most of the students had applied for Australia, while in terms of size largest loans were disbursed for education in the US.
However there are some programs for which banks are taking caution while sanctioning loans. SC Sinha, executive director of Syndicate Bank pointed out, “Banks have been cautious of lending for pilot courses as well as air hostess training courses”.
Most of the banks said in spite of bleak employment situation in banking and financial institutions in the West, they are still giving loans for foreign degrees in finance and management. The Syndicate bank official maintained that although there have been no change in policy in terms of lending, then also banks are taking usual precautions in sanctioning education loans.
BoR reduces interest rates on education loan under ``Shiksha Sarathi`` scheme
Bank of Rajasthan a private sector bank with customer friendly environment with updated technology, has reduced interest rates on education loan under ``Shiksha Sarathi`` scheme.
The bank has revised rates from 13% p.a. to 12% p.a. for fresh loans irrespective of quantum of loan. At present the education loan is being offered at 3% below BPLR.
The new loan rate has been cut down by 100 basis points. Thus this move will be beneficial for student community across the country who believes that lower interest rates on education loans will be helpful for them in pursuing professional courses.
The bank has revised rates from 13% p.a. to 12% p.a. for fresh loans irrespective of quantum of loan. At present the education loan is being offered at 3% below BPLR.
The new loan rate has been cut down by 100 basis points. Thus this move will be beneficial for student community across the country who believes that lower interest rates on education loans will be helpful for them in pursuing professional courses.
Eligibility norms for educational loans for Virudhunagar students modified
The eligibility norms to avail educational loans for students of Virudhunagar have been modified. Under the revised norms the students who have not been able to pass Plus Two examinations in first attempt will also be eligible to take the loans.
Virudhunagar MP B. Manicka Tagore told that the existing criteria that students must score a minimum of 70 per cent marks in the qualifying examination to get loan, has been removed. He added besides this the banks were not permitted to give loans to students who are not residing within their service area.
On October 19 MP has planned an educational loan mela at the V.V.V. College for Women for the students of Virudhunagar parliamentary constituency and Virudhunagar district.
He added, “All nationalized banks are participating in the mela. We are expecting at least 5,000 students and all eligible candidates will get the loans”.
Students who are pursuing professional courses can take loan. He said Union Home Minister P. Chidambaram will be distributing loan orders. The mela will be sponsored by two lead banks - Indian Overseas Bank (Virudhunagar district) and Canara Bank (Madurai district).
The maximum loan amount of Rs. 10 lakh will be given for studies within the country and Rs. 20 lakh for abroad. Mr. Tagore informed that the students do not have to give any security to get loans for up to Rs. 4 lakh. But a personal surety will be required for the loan amounts above Rs. 4 lakh and Rs. 7.5 lakh.
Virudhunagar MP B. Manicka Tagore told that the existing criteria that students must score a minimum of 70 per cent marks in the qualifying examination to get loan, has been removed. He added besides this the banks were not permitted to give loans to students who are not residing within their service area.
On October 19 MP has planned an educational loan mela at the V.V.V. College for Women for the students of Virudhunagar parliamentary constituency and Virudhunagar district.
He added, “All nationalized banks are participating in the mela. We are expecting at least 5,000 students and all eligible candidates will get the loans”.
Students who are pursuing professional courses can take loan. He said Union Home Minister P. Chidambaram will be distributing loan orders. The mela will be sponsored by two lead banks - Indian Overseas Bank (Virudhunagar district) and Canara Bank (Madurai district).
The maximum loan amount of Rs. 10 lakh will be given for studies within the country and Rs. 20 lakh for abroad. Mr. Tagore informed that the students do not have to give any security to get loans for up to Rs. 4 lakh. But a personal surety will be required for the loan amounts above Rs. 4 lakh and Rs. 7.5 lakh.
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