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Study Of Effectiveness And Evaluation Of Indian Banks’ Strategies Regarding Student Financing

(A case study of State Bank of India)

Short Synopsis

For

Ph. D. Programme 2009-10

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DEPARTMENT OF MANAGEMENT

FACULTY OF MANAGEMENT SCIENCE

Submitted by:

Name: Aarti Dewan

Registration No.: 09029990081

Registration Date: 18/2/2010

Supervisor:

Name: Dr Priyanka Srivastva

Sign: Designation: Professor

Department: FMS Department MRIU, Faridabad

DECLARATION

I hereby declare that the PhD Research Scholar entitled topic “Study of Evaluation of Banks’ Strategies regarding Student Financing (a case study of State Bank of India)” is my own work and endeavor and has been compiled by me under the supervision of my guide Dr.Priyanka Srivastva.

This research proposal has not been previously submitted for the award of any degree, diploma, associate-ship, fellowship or its equivalent to any other University or Institution. When other sources of information have been used, they have been acknowledged. Hence, it may kindly be accepted by DRC as per the requirement.

Signature of research scholar

Name: Aarti Dewan

Registration No.: 09029990081

Batch: 2009-2010

Department: Faculty of management

CERTIFICATE

This is to certify that entire text of this synopsis preferred by research scholar, has been read thoroughly & it is as per guidelines & grammatically corrects & free from plagiarism. This has been prepared under the guidance & supervision of my supervisor.

Certified that the synopsis “Study of Effectiveness and Evaluation of Indian Banks Strategies regarding Student Financing” (A critical case study of State Bank of India)” is the record of bonafide work carried out by Ms. Aarti Dewan under my supervision. The research proposal is worth submitting for the degree of Doctor of Philosophy in Management under the Faculty of Management Science.

Signature of Supervisor

Name: Dr Priyanka Srivastva

Designation: Professor

Department: FMS Department MRIU, Faridabad

RECOMMENDATIONS

I recommend this short synopsis is prepared and submitted by Ms Aarti Dewan for approval of Ph D Quality Enforcement committee and therein to be uploaded on Shodh Gangotari.

Dr Chhavi Sharma

Director & Dean FMS, MRIU

ABSTRACT

The study proposes to assess the reasons and factors related to education loan strategies given by Indian Banks and also examine the students’ expectations with respect to different aspects of student loan. Further the study also proposes to evaluate the strategies for these banks for raising students’ confidence towards Student Financing Schemes. The research design of the study is descriptive. The study intends to make use of information collected from secondary data sources. Research is two tier studies and seeks to explore the responses from both the student and Bank’s Official i.e. for students to know reasons and problems faced by them and from Bank Officials to know their opinion towards education loan. The data collected from sources like bank’s website was further put to analyze by using statistical techniques . Education not only impacts the human development and economic growth, but is the fundamental requirement of democracy. Through education, people become more responsible and informed citizens, and can voice their concerns and issues in political system of their society. It is an essential element for democracy and eradicating poverty. It also helps people in improving productivity, thus playing greater roles in economic life and earning a better livelihood for themselves and the society. Student loans undeniably have varied advantages, but in many cases, the borrowers may end up being caught in a bigger trap than what they had imagined. With the mounting fee structure of educational institutions it has become really difficult for students, belonging to average pool of society, to enroll themselves for higher studies due to cash crunch.

Key words

Student Financing, Student Perception, Value Addition, Mortgage, Procedure, Disbursement etc

Contents

S.No. Description Page No

1. Introduction 1

2. Literature Review 9

3. Objectives 14

4. Work Plan & Research Methodology 15

5. Significance of the Study 16

6. References 17

Introduction :

Education is the process of instruction aimed at the all round development of individuals, providing with necessary tools to participate in day to day activities of the world. It dispels ignorance and boosts moral values in the individuals. It forms the basis for lifelong learning and inspires confidence to face challenges; besides providing skills to become more self reliant and increases awareness. Education not only impacts the human development and economic growth, but is the fundamental requirement of democracy. Through education, people become more responsible and informed citizens, and can voice their concerns and issues in political system of their society. It is an essential element for democracy and eradicating poverty. It also helps people in improving productivity, thus playing greater roles in economic life and earning a better livelihood for themselves and the society. Therefore, education is the key, which allows people to move up in the world, seek better jobs and ultimately succeed in their life. In India, getting education has been a big problem since long. A small minority in the elite class get access to excellent education facilities; whereas the poor practically get no education at all. One main reason for inadequate access to education in India is the high cost of education and lack of access to funding higher education.

Education is what helps an individual to rise higher in life; the word education itself has been derived from a Latin word “ed-u-care” which means “to rise”. Over years, right from the mahatma’s and The Guru’s, what has remained common is the important of knowledge and skills to others. However unlike that era, education is no longer free. Eklavaya had to give up his thumb as “ Guru Dakshina” but in over days we need not bestow “ Guru Dakshina” as Education now comes in exchange of money, today we can buy education for self and children whether or not we have enough funds to spend on the desired education and that is where “Education Loan” comes into picture.

Any parent would worry about their child’s educational needs. Most of the parents by now know the heavy education expenses; whether it is a private high school, college, university, or overseas education, the costs just keep on adding up. An education loan is just like a debt. The money that you borrow from the bank and repay it with interest. The importance and value of education is known to all of us. It is the actual wealth of a person. However, at times, we encounter the situation where there is willingness to study more and get higher degrees, but due to our limited financial sources it gets bit difficult. It is under this situation education loans prove as a boon.

India is Promised Land of scholars and saint. There has been no dearth of knowledge in India, since Time immemorial. Indian civilization has been blessed with priceless knowledge of Vedas and Purans. Coming all along with these Holy Scriptures, till the modern age of Science and Technology, India can be found nowhere legging behind. Nevertheless we need not deny the fact that, India still possesses some quarters, where a bud of education is still to sprout. As India, witness tremendous upheavals in Indian economy- a segment ascending, while another suffers heavy descend- Education System is also building similar pandemonium. Every year India produces thousands of brilliant assets from IITs, IISCS, AIMS, BITS and ISB, who glows inn very sphere of modern world concurrently, India still owns people in large numbers who are debarred of the basic education. Hence, in spite of its triumph in major areas, Indian education system is tainted with a few blemishes.

At the down of modern India, she has received privileged initiatives by scholars like Raja Ram Mohan Roy, Dayanand saraswati to spread education to many quarters of Indian Population-big or small. British Govt. also took measures in spreading education among Indian masses by establishing various schools and colleges. No doubt, this was a part of their ruling policy but has been one of the promising act to which India will always comply with. After Independence state Govts. Held responsibility for education, where upon in 1976, the state and centre took jointly responsibility.

Tradionally in India, public enterprise has been the primary sporter of educational institutes with state govt. bearing almost 80-90% financial burden and central Govt. accounting for the rest According to recent estimate, Indian students (or their parents) have spent almost $1.1billion for getting undergraduate and business degree abroad (not including graduate and advanced degree students who mostly get scholarship from the foreign university) while Govt. laws and mandated did not allow even a tiny fraction of that money to be injected into Indian public Universities in the form of endowment or tuition fees . Therefore, Govt. policies and legal mandates need a major reformation.

ABOUT STATE BANK OF INDIA:

The State Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to creditworthy parties, the State Bank of India catered to the needs of the customers, by banking purposefully. The bank served the heterogeneous financial needs of the planned

Economic development.

A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured. All courses having employment prospects are eligible. Student loans are the main method of direct government support for students in higher education. Money is loaned to students at a subsidized rate to help towards their maintenance costs and to cover the cost of tuition fees. Graduates repay these loans to the government after their income exceeds the threshold level. These loans are therefore a method for private contributions towards the costs of higher education. An aim of the student support system is to ensure that the upfront costs do not deter potential students. Graduates repay student loans and they generally have above average incomes. The current system has been criticized on a number of different grounds including not covering living costs, excluding part-time students, being too expensive, targeting its interest rate subsidy at higher earning graduates and putting off potential students who are concerned about graduating with large debts.

The boom in the banking sector has led to release of large amount of funds for education loans. Now, education loans are easily available from various banks in India and this change is encouraging more and more students to take up higher education despite their financial shortcomings. Many nationalized as well as private banks have come up with various educational loan schemes that students can benefit from.

State Bank of India (SBI) is India's largest bank by profits, assets, deposits, branches and employees - a position it is holding for two centuries now. The government of India controls the bank through the majority stake (nearly 60% as on March 31, 2007) held in it by Reserve Bank of India. The central bank is in the process of transferring this stake to the direct control of the government of India.

SBI has a hoary past, starting two centuries ago in Kolkata as Bank of Calcutta on June 2, 1806. Since then it has undergone various transformations. It was re-named Bank of Bengal in 1809. Bank of Bengal was merged with Bank of Bombay and Bank of Madras in 1921 to form Imperial Bank of India. This was converted into the present State Bank of India in 1955 through a special Act of the government of India in 1955. In 1959, SBI took over eight banks which were formerly associated with states of pre-independence India. These banks - State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra and State Bank of Travancore - later came to be known as Associate banks of SBI.

At the time of India's independence in 1947, SBI (then Imperial Bank) had a capital base of Rs. 11.85 crore, deposits and advances of Rs.275.14 crore and Rs.72.94 crore respectively and a network of 172 branches.

The State Bank of India, popularly known as SBI, is one of the leading banks in India. The bank traces its origin to the first decade of the 19th century. Later on, it was merged with the Imperial Bank. In the year 1955, the Government of India nationalized the Imperial Bank along with the Reserve Bank of India. Ever since that time, the bank acquired its present name that is SBI. The State Bank of India is India's largest commercial bank. The bank has been striving sincerely to adhere to the efforts of providing utmost customer satisfaction to the best possible extent. The Bank is actively involved since 1973 in non-profit activity called Community Services Banking. All the branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes. Their commitment to nation-building is complete & comprehensive.

In terms of profits, assets, deposits, branches and employees, State Bank of India are the country’s largest commercial Bank. It strives to continuously provide latest and up to date information on its financial performance. It is their endeavor to walk on the path of transparency and allow complete access to all the stakeholders enabling total awareness about the Bank. Including that SBI is one of the largest lending Bank of India besides other loans in association with IBA, SBI launches SBI Student loan Schemes:

SBI Student loan Schemes: This scheme was recommended by R.J. Kamath Committee. To extend the need based financial assistance to deserving/meritorious students for pursuing higher education in India and abroad with relaxations in security and margin. It is a model scheme prepared by IBA as advised by RBI and in pursuance of instructions of Ministry of Finance.

• SBI Education plus Schemes: This scheme was targeted at employed persons who pursue Distance Education Courses and Part time Courses. It is a personal Loan scheme.

• Education loan Scheme for NRI: RBI has conferred a non-resident status to Indian Students abroad under FEMA. Hence they are now eligible for the facilities just like any NRI.

• New Insurance Schemes for Education loan: In this Policy the repayment of an Education Loan will be made under the policy in the event of death of the borrower(s). It will be marketed as an Individual product and a policy document with SBI designated as the assignee will be issued to each borrower individually.

• SBI Scholar: In this scheme Loans will be granted to deserving/meritorious students for pursing full time courses in India at approved premier and reputed institutes.

• Special Education loan package for ISB: A special package of the Education Loan scheme is being offered to students of Indian school of Business (ISB), Hyderabad wherein a loan offered with fixed interest.

• Education tie-up with APTECH: It is a personal loan product. Can be sanctioned to an earning parent to a student or earning student to take-up a computer course.

• SBI Education Plus: This scheme is Only for Career Enhancement Purpose for Employed people pursuing Distance Education. This loan product is in the form of personal loans and is different from Education Loan Scheme.

OVERVIEW OF

STUDENT FINANCING:

Student financing is meant for the needy students whose financial background is weak. Student financing available in the following form:

• Higher Education Loan

• Scholar Loan

• Career Loan for employed person.

• Loan for Self-Employment

Finance is required for further studies ( for graduations, Post graduations, PhD). Till some year’s back higher education and quality education was not affordable to some illustrious students because of the financial constraints. There was no any alternative but to leave the studies incomplete or to jump in the job market prematurely and unwillingly. And this led to untimely end of budding talents and their forceful transformation into to the mediocrity. Although scholarships were there, but those were so less in numbers that only luckier few could avail them. But now the things are different with lots of Student Loan Options and Student Loan Schemes being offered by various Banks and Institutions.

The boom in the banking sector has led to release of large amount of funds for education loans and loans for self employment. Now, education loans are easily available from various banks in India and this change is encouraging more and more students to take up higher education and to begin their own careers despite their financial shortcomings. Banks have adopted various schemes to facilitate the growth of the education loan portfolio and to set up new ventures in different fields. Apart from tying up with several institutes and offering interest rate discounts, they also accord online sanctions and ensure speedy disbursal of the loan.

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.

Importance of Education Loan in Present Era:

Education is the process of instruction aimed at the all round development of individuals, providing with necessary tools to participate in day to day activities of the world. It dispels ignorance and boosts moral values in the individuals. It forms the basis for lifelong learning and inspires confidence to face challenges; besides providing skills to become more self reliant and increases awareness. Education not only impacts the human development and economic growth, but is the fundamental requirement of democracy. Through education, people become more responsible and informed citizens, and can voice their concerns and issues in political system of their society. It is an essential element for democracy and eradicating poverty. It also helps people in improving productivity, thus playing greater roles in economic life and earning a better livelihood for themselves and the society. Therefore, education is the key, which allows people to move up in the world, seek better jobs and ultimately succeed in their life. In India, getting education has been a big problem since long. A small minority in the elite class get access to excellent education facilities; whereas the poor practically get no education at all. One main reason for inadequate access to education in India is the high cost of education and lack of access to funding higher education.

Student loans undeniably have varied advantages, but in many cases, the borrowers may end up being caught in a bigger trap than what they had imagined. With the mounting fee structure of educational institutions it has become really difficult for students, belonging to average pool of society, to enroll themselves for higher studies due to cash crunch. However, if obstacle is cash, an education loan is at rescue.

 Education loans are loans offered to students to enable them to meet the costs of a professional program viz. MBA. The loans not only cover the cost of the tuition fee but also almost all the expenses involved in the pursuit of higher education. Education loans are getting increasingly popular among public due to extensive marketing of benefits of this loan by authorized financial bodies. Such popularity of these loans is also an outcome of students’ expectations to fetch high salaries at the end of their professional training and likely to be in a position to repay these loans comfortably over a period.

 The image may seem rosy at the very onset; however, the stark realities may mar the impact. Student loans undeniably have varied advantages, but in many cases, the borrowers may end up being caught in a bigger trap than what they had imagined. This is because the advantages of loan are always highlighted in a very large manner but the disadvantages are often swept under the carpet. Team Cool Avenues attempts to delve a layer deeper and bring some advantages as well as disadvantages of education loans to the table. A dignified education can change the entire life of a person, leading him towards a successful life and financial independence. Education loan enables you to meet the financial demands of a reputed MBA program or any such professional course. The best part of these loans is that once you complete your objective and achieve financial freedom, you can pay back them easily. Hence, the commitment involved with such loans is very reasonable and appealing.

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

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

 Another key benefit of these loans is the deferment of re-payments. The borrower is not required to repay the loans while studying as the re-payment process commences after completion of the said course and attaining a job within a stipulated span of time. Student loans also show considerable flexibility towards loaner in terms of repayment schedule.

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

Literature Review:

The research which has been studied under this topic is prescribed as under:

Higher Education in India: Emerging Issues of Equity and Finance by Sanjeevaiah Puttawamaiah

Maria Ulpah (2010), is analyzing the role of student loan by commercial banks in financing the estimated budgetary subsidy to general collegiate education by Government and Private Aided colleges in Karnataka State (India). This paper compare and contrast the two most common institutions that make consumer loans, banks and credit unions, in terms of their structure, general loan policies, and common instruments. After laying the groundwork for each type of institution, several generic scenarios will be presented for typical consumers wishing to obtain a loan, in order to determine what kinds of offers might be made by a typical bank or credit union."

Many News of the Day: Federal Student Loans Just Got Better By Kruger, Mike (July 6, 2010), This argumentative essay persuades the reader to realize how financial aid for students is a positive and supportive financial solution to attend college. In this regard, the student who is unable to afford college tuition can get a student loan, which allows them to gain the education they need for a good job. Although, the debt from loans can be burdensome after college in some cases, the ability through an education to find a job nullifies the inability to the debt accrued. In The USA Today, highlighted some of the issue related to student financing by Professor Robert Cressy.

Options for Student Borrowers: A Derivatives-Based Proposal to Protect Students and Control Debt-Fueled Inflation in the Higher Education Market Cornell Journal of Law and Public Policy, Vol. 20, No. 1, 2010

After the bursting of the housing bubble and the Great Recession that followed, there has been an increasing focus on improving market transparency and recognizing other potential bubbles. The higher education and student loan markets are under new levels of scrutiny because they display many of the hallmarks of a bubble. The American government’s model of freely extending federal loans to students, while improving lower- and middle-class access to higher education, has enabled the formation of detrimental distortions in the higher education market. At the same time, the soaring cost of higher education has saddled a generation of young Americans with unmanageable student loan debt. Evidence is beginning to mount that, for too many, their debt-financed higher education represents a stifling encumbrance instead of the great investment that society’s collective commonsense has long suggested.

This Article explores the factors that contribute to the distortions in the higher education market, including (1) the informational asymmetries that exist between the various parties to a typical debt-financed purchase of an education, (2) accreditation rules, (3) the peculiar incentives of school faculties, and (4) widely followed school rankings. Due to nuances between different segments of the higher education market, this Article focuses on one segment for the sake of brevity: law schools. However, the analysis and prescription have more general applicability to all segments of the higher education market.

Education Policy and Equality of Opportunity, (Kyklos, Vol. 61, Issue 2, pp. 279-308, May 2008)

It provide a measure of equality of educational opportunity in 54 countries, estimated as the effect of family background on student performance in two international TIMSS tests. Using cross-country variation in education policies and its interaction with family background at the student level, we then estimate how equality is related to organizational features of the education system. We find that equality of opportunity is positively related to late tracking into different school types and to longer pre-school education. Pre-school enrollment has an inverted U-shaped relationship with equality. Equality is negatively related to private school financing, but positively to private provision.

"Remedying Education: Evidence from Two Randomized Experiments in India" (with A. Banerjee, E. Duflo, and L. Linden, Quarterly Journal of Economics, 2007, 122(3).) This paper presents the results of two randomized experiments conducted in schools in urban India. A remedial education program hired young women to teach students lagging behind in basic literacy and numeracy skills. It increased average test scores of all children in treatment schools by 0.28 standard deviation, mostly due to large gains experienced by children at the bottom of the test-score distribution. A computer-assisted learning program focusing on math increased math scores by 0.47 standard deviation. One year after the programs were over, initial gains remained significant for targeted children, but they faded to about 0.10 standard deviation

Another article on student loan by Narayana, M. R. Student Loan by Commercial Banks: A Way to Reduce State Government Financial Support To Higher Education in the Journal of Developing Areas - Volume 38, Number 2, Spring 2005, pp. 171-187. This paper makes an empirical analysis of the role of student loan by commercial banks in financing the estimated budgetary subsidy to general collegiate education by Government and Private Aided colleges in Karnataka State (India). A major estimation result shows that the maximum total fee collectable, as a percentage of total estimated subsidy, is equal to 4.22 (or 4.74) percent in Government (or Private Aided) Colleges in 2000-01. Consequently, student fee revision, as a single instrument for total reduction of the budgetary subsidy is found to be inappropriate, even if it is entirely financed by student loan. The policy framework for analysis of linkage between student loan and regional fiscal policy in this paper is of special relevance for other states within India as well as for other developing countries, where the regional governments face the problem of reducing budgetary support to higher education through student loan scheme. In addition, the description of Indian model of student loan is useful for comparative studies in international education.

Retail banking loan portfolio equilibrium mix: a Markov Chain model analysis, American Journal of Applied Sciences, Jan, 2005 ,V. Thyagarajan, Saiful Maznan Bin Mohamed -in this article, the variance analysis of actual loan sanctions with the non-documented method of loan allocation of the selected retail bank, over a period of 24 months, revealed that there is a scope to improve their income earnings. From the results it was suggested that the loan proportions among various types were as follows: Housing (32.0%), Others (28.1%), Business (20.0%) and Education (19.7%). These proportions can be taken as guideline percentage within the government norms for the priority sector. Simulation studies were also done to calculate the expected income of interest using Markov proportions and compared with the actual interest earnings to prove the superiority of the model.

Analysis Of Education Loan: A Case Study Of National Capital Territory Of Delhi R Srinivasan, Assistant Professor (Finance), Singhania Institute of Management & Technology, Gurgaon, INDIA Dr. Debabrata Das, Director & Professor, Indian Business Academy, Greater Noida, INDIA .The objectives of this paper is to study the practices followed in selecting the beneficiary student for grant of education loan for pursuing higher studies in India; problems faced by applicants; background of the problematic borrowers and steps taken to overcome the problems in getting loans. This research paper uses probit model for statistical analysis. From the analysis it can be concluded that a student pursuing postgraduate professional courses is more likely to get education loan than a student pursuing undergraduate course. Similarly, banks prefer giving loans to students seeking admission in government owned/approved institution. However, there does not seem to be any discrimination between students with or without prior work experience, for getting education loan. The study further reveals the reluctance of private sector banks in extending loans. This paper is useful to aspiring students.

Student Loans and their Effects on College Consumption: Peter Comes, Joe, Everet, Sommer University of Illinois at Urbana-Champaign, Dr. Mary Arends-Kuenning, ACE 398

Student loans are becoming more of a problem for college students across many campuses’ nation wide because of increasing tuition costs and decreasing amounts of grants and scholarships. Data was collected from a campus online survey and focus groups were conducted with University of Illinois Students, both methods focued on student loans and how they affects a college student’s consumption. The results of the research have shown that college students at this university are not worried about their student loans and it does not affect their current consumption greatly, but does affect larger purchase decisions slightly. This finding has shown that college students should possibly be more aware of their student loans while attending college.

Rising Need for Education Financing in Japan ,Sachiko Miyamoto ,Nomura Institute of Capital Markets Research, Nomura Capital Market Review Vol. 11, No. 1

Although household's education costs in Japan are high relative to other industrial countries, Japanese households have only limited means for securing student loans or setting aside savings for higher education, and this is making the enhancement of mechanisms to obtain education financing an urgent issue. Japan's declining birth rate has led to a decline in the population of 18 year olds, but college matriculation rates are rising, as is the number of student returning to college mid-career, and this is creating strong demand for higher education among households. Based on this, we think the common perception of a shrinking market for college education in Japan is overly pessimistic. In this paper, we analyze the education financing methods currently available in Japan and then consider some desirable responses.

Student loans in financing higher education in India (Jandhyala B. G. Tilak ) in 1992 … show all 1 Confronted with declining public budgets for education on the one hand, and the need for more resources on the other, many developing countries such as India, have been examining alternative methods of financing higher education. One such mechanism is student loans. A student loan programme is not a new phenomenon in India. The National Loans Scholarship Scheme has been in operation since 1963. This article critically reviews the experience of implementation of the National Loan Scholarship scheme. It examines strengths and weaknesses and problems specific to this programme in India, with a view to identifying measures for marginal improvement in the programme. The conclusion is that at present student loans make little contribution to either the efficiency or equity of higher education in India.

Objectives:

The Proposed study has been taken up with the following issue and concerned areas:

1. To review the number of student loans issued by SBI all over India by comparison of different states data.

2. To analyze various methods of operating education loan.

3. To understand the current scenario of the “SBI Education Loan”.

4. To gain knowledge about various education loan schemes of SBI.

5. To Offer suggestion for the improvement of Education Loan schemes by comparing with other states.

Work Plan and Methodology:

It is a case study which represents realistic, complex and contextually rich situation. Keeping in view the nature of proposed study which represents in depth study of SBI and its Schemes. The research design which evolved over the past few year as a useful tools for investigating the trends of data. It is a descriptive study also. It new and unexpected results which leads research in new direction. It is based on true data.

Research Tools:

The research tools will be depending on the nature of qualitative and quantitative information collected through secondary data. The data collected through secondary sources will be analyzed through basic statistical tools such as ratios, percentage, average, trend analysis, chi-square test, Pie-chart techniques .

Study Period:

The research study will be based on the secondary data of SBI of 10-15 years.

Source of Data:

The study depends on secondary data published by banking institutions, organizations and research paper concerned with loans by commercial banks. The publications of RBI- Report on Trend and Progress of Banking in India (Annual) Banking Statistics, Report on currency and finance (Annual), RBI Bulletins (Monthly), Annual Reports and balance sheet of SBI, Internet Websites and Banking Journals will be basis of proposed study.

In addition, a pragmatic review and analysis will be collected through internal bank documents like policies and procedures of bank loan authorities and comparative analysis of to view the effectiveness of education loan given by banks.

Scope of the Study:

The study covers only national aspect and only State Bank of India; international aspect regarding student finance will be ignored. The study will cover banking schemes regarding educational loans for Higher Education Loan and Scholar Loan of SBI in all states of India.

Significance of the study:

Development of human capital is a national priority therefore it is the duty of government that no deserving student is denied opportunity to pursue higher education or start his dream career for want of financial support. Finance for education should be seen as an important investment instrument for economic development and prosperity as Knowledge and information would be the driving force for economic growth in the coming years.

As Higher education is very costly so that Cost of Higher studies will not stop talented and financial week students from further studies. Education Loans or student financing schemes are very helpful to those poor sections of population whose children are bright in studies but cannot pursue higher education due to financial problems. These loans are given on very liberal terms by financial institutions.

Availability of Student Finance will Empower Human Capital of country, So The Government plans to subsidies the interest rates of education loans. This step that will surely benefit many students. Because Education Loan is an investment not an expenditure. Although anyone thinking about taking a loan out needs to give careful consideration to affordability and necessity, often taking out a loan in order to fund further education can be looked upon as an investment. It sometimes becomes necessary to compare education loan rates before deciding a right path for career.

Financing costly professional courses is set to become cheaper for students from modest middleclass homes. As things stand, education loan comes with clauses that allow students not to pay interest during their academic life. The interest for this period is added to the principal and payments begin once the student starts working.

|Loans are available at competitive interest rates. There are so many lenders available in the market. It is therefore necessary to |

|compare and choose the one that matches the student needs. If the student is experiencing difficulties in repaying the loan, it is best |

|to get an extension because the penalties for late payments are a little higher. So higher education is no longer a dream for students |

|who do not have the money. Assistance loans to students by meeting their educational needs, without creating any problem. So, Before |

|taking loan a student has to compare some factors like Interest rates, repayment period, security etc. |

| |

|References: |

|Books: |

|SBI_Student Loan, Bhartiya State Bank, Agra Publication, pp 286 to 292 |

|Key to Success, State Bank of India: Hyderabad Publication, pp134 to 137 |

|Research Papers: |

|“Czech-Dutch comparative study of student support systems and their effects on the development of inequity in access to higher |

|education.,” Petr Matějů2 and Tomáš KonečnýInstitute of Sociology, Academy of Sciences of the Czech Republic Hans Vossensteyn Center for|

|Higher Education Policy Studies, University of Twente, Enschede |

|Delhi Capital – Explore your capital with us. (2009). . Accessed 25th June, 2009 |

|Mousumi H. Ghosh, “Educational loans getting lot more easier”, Times News Network; (2008), |

|Menon, Radhika & Mohanty Elina (2007) – Education loans ; 80 % goes for domestic courses, Business Line, The Hindu Group, Monday , Apr |

|1, 2007 (Mumbai). |

|Mohan, Vijay and Paul, G.S. (2007) - Education loans remain a distant dream, Chandigarh Tribune, TNS, Sunday, July 8, 2007 |

|Narayana M. R., (2005), Student Loan by Commercial Banks A way to reduce state government financial support to higher education in |

|India, The Journal of Developing Area, 38, 2. |

|Options for Student Borrowers: A Derivatives-Based Proposal to Protect Students and Control Debt-Fueled Inflation in the Higher |

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|V. Thyagarajan, Saiful Maznan Bin Mohamed, “Retail banking loan portfolio equilibrium mix: a Markov Chain model analysis”, American |

|Journal of Applied Sciences, Jan, 2005 |

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|economyofindia.wikipedia |

|forms/eduloandetail.pdf |

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