Upload
joshua-lyons
View
223
Download
0
Embed Size (px)
DESCRIPTION
Introduction
Citation preview
Education Loans
Revised- July 2014
• Introduction– Education Scenario in INDIA, Latest trends, Why Education loans
• Customer Insights – Potential of Education Loans, Current Players, Target Group-
examples, Customer Profiles
• Customer Offerings– What are the various products in offerings
• Processes– Documentation required, Application Procedure, Tranche
Disbursements
• Customer FAQ's– Most commonly asked questions
• Application Form – Sample of filled Application Form
Introduction
Education in India
• 1027 million population and 350 million illiterates• 87% dropout by 12thstd• Literacy rate of 65% which is on the rise.• Lack of proper public education systems prompts 27% of the
population to go for Pvt. education.• Cost of Pvt. school education has increased from Rs.25000 to
Rs.65000 per annum• There is a silver lining to the whole scenario with lot of initiatives
from the Govt. and World Bank aided projects ……………
Education in India• Government Programs include
– Sarva Shikhsha Abhiyan–Universalize Elementary Education– Operation Blackboard –Provide minimum Infrastructure– District Primary Education Programme– Primary Education & Secondary Education
No assistance to higher education !!!
Scenario of Higher Education• Growth and Types of Institutions
30% enrolled in fully private
institutions
Public funded institutions have not
increased in past five years
42% of institutes in India are
privately funded and run
Higher Fees
Name of the Institute
Present Fees for PGP2007 – 2009 (Rs.)
Proposed Fees for PGP2008 – 2010 (Rs.)
I - Year II – Year Total I - Year II -Year Total
IIM Ahmedabad
200000 230000 430000 550000 600000 1150000
IIM Bangalore 250000 250000 500000 400000 500000 900000
IIM Calcutta 201400 198600 400000 300000 400000 700000
IIM Lucknow 194500 209500 404000 250000 250000 500000
IIM Indore 190000 200000 390000 300000 310000 610000
IIM Kozhikode 190000 210000 400000 300000 300000 600000
Source: Ministry of Human Resource Development, April 21,2008
Higher FeesName of the Institute City Total Fees
(2008-09) Future
IILM Institute for Higher Education Gurgaon 1080000 ?????ICFAI Business School Hyderabad 950000 ?????Indian Institute of Health Management Research Jaipur 680000 ?????
T A Pai Management Institute Manipal 646000 ?????Deepshikha College of Technical Education Jaipur 600000 ?????Institute of Finance & International Management Bangalore 600000 ?????
Fore School of Management New Delhi 600000 ?????Foundation for Organizational Research & Education – School of Management New Delhi 600000 ?????
Asia Pacific Institute of Management New Delhi 590000 ?????Centre Of Management Development Ghaziabad 580000 ?????
Latest Trends
• Student educational loan is NOT a focus area for most of the banks
• Complex paper work required to process the student educational loan
• Almost 81%of the students interviewed said “Yes” to their opting for Education Loan
• Lack of funds for higher studies is a huge deterrent
Why Education Loans?• No specialized financial institutions catering to education loan market in
India
• Education loan volumes are growing at 35-40%per annum driven by:– High priority on education in the Indian culture– Privatization of post-secondary education– Emergence of private high-end educational institutions– Rising costs of education– Introduction of online system for processing loan applications within
stipulated time and conveying sanction to the student
• Market for Education Loans in India is constantly expanding:– GDP Growth >6% pa is creating millions of new jobs for educated
youth– Extremely high rate in enrollment of students for higher education
• Millions of aspiring students who can’t find funding for their education due to bureaucratic approach of traditional banks
Customer Insights
Potential of Education Loans• Potential in Indian Market for Education Loan
• Undergraduate and graduate education -Private Financing• Opened up the higher education sector to private educational
institutions
100 million
219 million
20 – 29 yrs
10 – 19 yrsTarget segment of education loans
No Government Subsidy
High Cost of Education
Huge demand of education loans
Why Now?
Compelled to explore
loan options
Up front Expenses
Sharp rise in fees of IIMs
Open minded to seek
guidance
Opportunity Available
Huge Opportunity
India higher
education
market
Great need for
skilled
manpower
Huge population
of students
going aboard
Average course
fees of $20,000
Education loan
focus on Indian
colleges
Current Market Players
Bank Current Year (2008-09)
Last Year (2007-08) % growth
State Bank of India Rs 6600 crores
Rs 4400 crores 50%
Indian Bank Rs 1850 crores
Rs 1149 crores 61%
Andhra Bank Rs 1800 crores
Rs 1167 crores 54.24%
Bank of Baroda Rs 1000 crores
Rs 753 crores 32.67%
Bank of India Rs 1000 crores
Rs 720 crores 38.9%
UCO Bank Rs 333 crores
Rs 225 crores 48%
Union Bank Of India Rs 80 crores Rs 55 crores 45%
Education Loan Market
Existing Market systems•Catered by PSU Banks•Inbound/model pull•Cross selling to existing
customers•Long Processing & low
approvals
Credit & Operational Risks•Lack of domain expertise•Tracking & repayment
complexities
Growth Potential•Changing Demographics•Industrial resurgence•Deeper penetration of fin
services•Service economy growth
Regulatory Scenario
Priority Sector
Pricing for banks regulated
SWOT for Tata Capital Financial Services Ltd
Strengths
Based on “Trust”
Tata Eco System
Service Delivery
Weakness
Late entry into the market
Cost of funds
Not top of mind
recall
Opportunities
Recession proof income
Growing Demand &
supply gap
Only NBFC to offer
Education Loan
Threat
Highly Competitive
Market
Aggressive marketing by
PSBs
Our Value Proposition
“TCFSL helps you realize your/your child’s dreams of
future studies, in India and Overseas by providing
access, finance and convenience.”
Target Group -Examples• Post-Graduate Courses: Ms. Rekha hails from a
middle class salaried family. With a single earning parent, the high fees of the institute would have made her dream education distant without availing education loans. For such students, education loans bridge the financial gap to pursue their dream courses.
• Going Abroad: Mr. Ganesan had secured admission at Purdue University. His parents kept their house in Chennai as collateral to ensure that their son’s dream of higher education abroad is met
Target Group -Examples
• Part-time courses: Mr. Sunil wanted to pursue post-graduation after his college but could not. After working for 2 years in an MNC, he felt the need to do part time post graduation course to increase his skill sets
• Vocational courses: Ms. Reshma wanted to be an airhostess. With the growing demand of such vocational courses, the financial needs of the programme can strain the finances of the family. The education loan would help balance her aspirations and reality
Education LoansCustomer Profile• Student
– Indian Nationality– Secured admissions in recognized courses/ Institutions/
Universities through a selection process / entrance test.– Age (18 years – 35 years)– 60% in last qualifying examination
• Parent– Salaried (Public Ltd Companies, Multi National Companies,
Govt./Public Sector Undertakings, Educational Institutions, Hospitals, Financial Institutions, Insurance Companies, Banks, International Non Profit organizations, recognized Private Ltd Companies etc…)
– Self employed Professionals (Doctors, CA, Architects, Engineers, Cost Accountants, Consultants etc…)
– Self Employed Business (Retailers, Wholesalers, Entrepreneurs, Manufacturers, Proprietors, Partners or Directors of Pvt. ltd. companies)
– Age for Salaried Parent (23 years – 58 years) / Age for SENP or SEP Parents (23 years – 65 years)
Customer Offerings
Education LoansEligible Courses• Studies in India
– Post graduation (Masters, PhD, MCA, MBA, MS)– Professional courses (Engineering, Medical, Architecture,
Veterinary, Law, Management, Computer Science etc.)– Vocational Courses.– Courses by IIMs, IITs, IISc, XLRI, NIFT, reputed universities &
institutes etc.
• Studies Abroad– Courses conducted by CIMA – London , CPA - USA etc.– Undergraduate Courses in aboard.– Vocational Courses.– Courses admitted through GRE, GMAT, SAT, TOEFL exams.
ONLY ONE COURSE WOULD BE FINANCED AT A TIME !
Education LoansTenorA) Studies in India :-• Min 12 months & Max 5 years from the expiry of the moratorium
period.B) Studies Abroad :-• Min 12 months & Max 3 years from the expiry of the moratorium
period.
Moratorium• Interest to be serviced during this period• Shall not exceed course duration + 6 months
Collateral RequirementLoan Amount Collateral
< 7.5 lakhs Not Required
> 7.5 lakhs
Upto 120% of loan amount and Third Party Guarantee for 100% of loan amount
Education Loans
Loan Amount
Margin Requirement
Studies In India Rs 75,000/- – Rs 15,00,000/-
Studies Aboard Rs 5,00,000/- – Rs 20,00,000/-
Up to 500000 No Margin
More than 500000 Studies in India 20%Studies Aboard 30%
Education Loans
Features •Favoring the institute•Tranche Disbursement
Requirement•Satisfactory Performance required
Remedial•Option to discontinue loans
Disbursement
Education Loans• Mode of Repayment• Flexible Modes of Repayment
– Electronic Clearing Services (ECS) / Electronic Fund Transfer (EFT)
– Post Dated Cheques (PDCs)– Deduction against salary
• No prepayment/foreclosure penalty to be charged
Secured Education Loans
Residential
Property
Commercial
Property
Govt.
Securities
Public Sector
Bonds
NSC/ KVP/LIC
Policies
Shares/
Debentures
Bank Deposits
Education Loans - Pricing
RAAC Rates
Category Loan Type Indian Studies
Studies Aboard
Processing Fees
Open Market
Secured 12.50% 12.50% 2.00%
Un Secured 14.50% 14.50% 2.00%
TATA Employees(Applicants/Co-applicants)
Secured 11.95% 11.95% 1.00%
Un Secured 13.95% 13.95% 1.00%
Education Loans – Unique Features• Attractive Interest Rates
• Higher limits of unsecured lending
• Principal Holiday Period– 6 months post course completion– Interests needs to be paid
• Disbursement– Direct disbursement– Avoid misuse of Loan
Loan Amount Security< Rs 7.5 lakhs No security> Rs 7.5 lakhs 120% of the loan amount
Education Loans – Unique Features• Tranche Disbursement
– As & when you require– Interest only on amount disbursed
• Flexible Repayment Options– Electronic clearing services (ECS) / Electronic fund transfer
(EFT)– Post date cheques (PDCs)– Deduction against salary
• Credit Shield– Borrower are insured during the loan tenure
• Flexible Collateral Option
• Avail Tax Exemption• Interest rate charged till moratorium• Fixed rate of interest• Easy release of collateral• Quick & Efficient disbursement• Easier Documentation• No hidden costs• Covers tuition fees, travel expenses, passage money, books,
equipments etc….
Education Loans – Unique Features
Examples
Examples
Processes
Documentation required
• Applicant– Mark sheet of the last qualifying exam– Admission letter/ Fee receipt– Schedule of expense of course– Copies of letter confirming scholarship/free ship/studentship if any
Documents Salaried Self-Employed Professional
Self Employed Businessman
Proof of income
• Pay slips for the last 2 months• Latest Form 16• Bank Statement for last 6 months
• ITR for most recent 2 years• Tax assessment order• Audited B/S &P&L• Bank statement for last 6 months
• ITR for most recent 2 years• Tax assessment order• Audited B/S &P&L• Bank statement for last 6 months
Proof of Employment
• Appointment letter• Increment / Promotion letter• Pay Slip• Form 16• ID card
• Qualification Certificate• Certificate of passing• Registration with respective association
• ITR / Assessment order• Bank certification report• Import/ Export code from RBI
Documentation required ….contd.
Documents Applicant Salaried Self-Employed
ProfessionalSelf Employed Businessman
Proof of Age
• School Leaving Certificate• Passport • Pan Card• Birth
Certificate• Life Insurance
Policy• Driving
License
• School Leaving Certificate• Passport • Pan Card• Birth Certificate• Life Insurance
Policy• Driving License
• School Leaving Certificate• Passport • Pan Card• Birth Certificate• Life Insurance
Policy• Driving License
• School Leaving Certificate• Passport • Pan Card• Birth
Certificate• Life Insurance
Policy• Driving
License
Signature Verification
• Passport• PAN Card• Driving license• Signature
verification from bank
• Armed Forces ID Card• Passport• PAN Card• Driving license• Signature
verification from bank
• Armed Forces ID Card• ID issued by
central/state govt.• Passport• PAN Card• Driving license• Signature
verification from bank
• Armed Forces ID Card• ID issued by
central/state govt.• Passport• PAN Card• Driving license• Signature
verification from bank
Documentation required ….contd.
Documents Salaried Self-Employed Professional
Self Employed Businessman
Residence Address Proof
• Telephone bill• Electricity bill• Water bill• Ration card• Electoral ID card• Pass book copy
with declared address
• Telephone bill• Electricity bill• Water bill• Ration card• Electoral ID card• Pass book copy
with declared address
• Telephone bill• Electricity bill• Water bill• Ration card• Electoral ID card• Pass book copy
with declared address
Documentation required ….contd.
Documentation required ….contd.
• Business continuity / operation proof– ITR– Sales Tax Returns– Registered Lease Deed on stamp paper
• Repayment Track Record• Loan Agreement
Salient Features• Avail tax exemption*• Moratorium up to 6 months beyond course completion• Interest payment during moratorium• Higher limits of unsecured lending• Fixed rate of interest during the tenure• Direct disbursement to educational institute• Quick documentation• Flexible repayment options• Covers tuition fees, project work, travel expenses etc…• No prepayment/ foreclosure charges• Multiple collateral options• Tranche disbursement• Credit shield available• Prompt release of collateral• No hidden costs
Application Procedure
Tranche Disbursement
Points to Pitch
Points to Pitch
House of TATA’s
Higher limits of
unsecured lending
Flexible tenure
options
Quick & efficient
disbursement
Direct Disbursement
Points to Pitch ….contd.
Points to Pitch
Availability of ECS
Better Service
Delivery
Easy
documentationCredit Shield
Interest on amount
disbursed
Points to Pitch ….contd.
Points to Pitch
Availability of ECS
Better Service
Delivery
Easy documentationCredit Shield
Interest on amount
disbursed
Points to Pitch ….contd.
Points to Pitch
Easy release of
collateral
No hidden costs
Multiple
collaterals
24X7 customer
support
Customer FAQs
Frequently Asked Questions
• What are the interest rates?• What are documents required?• Why should I take a loan from education loan from Tata Capital
Financial Services Ltd ?• Is their any age criteria for education loans?• What are the modes of repayment?• How long is the moratorium?• What is the tenure of the loan?• Are there any pre-payment charges?• What is an EMI? How is it calculated?• Who is a co-applicant?
Thank You