Securing admission to a reputed engineering or medial college is the dream for many students in India. But entrance examinations for these courses are extremely competitive.

Though there are coaching classes or institutes specialising in training students for entrance examinations, they come with a cost, which makes them out of bounds for several middle class students.

This trend had prompted banks to offer loans for financing fees of coaching classes or institutes that train students for entrance examinations to courses such as medicine, engineering and civil services. The Central Bank of India recently launched a scheme called ‘Cent Comp-exam.’ Under this scheme, students can avail up to a maximum of Rs 2 lakh as loan at an interest of 12 per cent and repayable in 36 months. For girl students, the interest rate is 11.5 per cent.

While this is a regular unsecured personal loan, Central Bank is looking at it more from a service point-of-view, said a senior official from the bank.

“Entrance examinations have become competitive. And coaching classes charge high fees. We expect there would be demand for the scheme across the country. In places like Kota, in Rajasthan there are dedicated institutions which specialise in training students for entrance examinations,” According to Central Bank official.

It is estimated that on an all-India level, about 15 to 18 lakh students take entrance examinations every year. In addition to this, there are State-level entrance examinations. In some cases, the fees can be as high as Rs 5 lakh, as the institutes even offer hostel facilities to students, According to Central Bank official.

The personal loans aid the borrowers to meet bulk personal demands. Personal demands that you have awaited for loan such as buying an expensive car, weddings, going for holidays in exotic destinations, educational expenses of children, embellishing the house, consolidation of debts, dispersing the numbers of bad credits and like wise can be executed in a simple manner. Bad credit holders are also benefited by this scheme and can derive the same benedictions.

CENT Buy Loan for Purchase of Consumer Durable Things

Purpose

To purchase all kinds of consumer durable articles including furniture and fixtures at residence.

Eligibility

All individuals of age 18 years and above who are

a) All Resident Indian individuals who are –

* Permanent salaried employees of Central / State government / Local self government / Defence staff / employees of PSU / Large Corporates / reputed establishments.

* Permanent employees of Govt. aided schools, Colleges, Universities, hospitals and other educational institutions.

* Self-Employed Persons / Independent Entrepreneurs who have regular source of income.

* Farmers irrespective of land holding engaged in production oriented agriculture activities and in other allied activities.

Finance may be extended individually or jointly with spouse who has regular source of income. Income of spouse may be added to calculate eligible loan amount.

The employees of proprietorship/partnership firm and other small organizations not having job security and persons employed on contract basis are not eligible for loan under the scheme.

Minimum Income Criteria

Salaried Persons: Gross Monthly income Rs.10,000/-

Other than Salaried Persons: Gross Annual

Quantum of Finance

In case of salaried employees with monthly income, the loan eligibility is 12 months gross monthly income as per previous month’s salary.

In case of other individuals, average annual Income worked out as per Income tax return of last two years.

However the maximum loan amount should not exceed Rs.2.00 lakhs.

Net Take Home Pay

The sanctioning Authority should ensure that the applicant complies to Net Take Home Pay criteria of 40% i.e. Net Take home Pay after accounting for all deductions including the installment of proposed loan should be minimum 40% of Gross salary.

Zonal Manager is empowered to relax the Net Take Home Pay criteria up to 35% of Gross salary on case to case basis taking in to account income and repayment capacity of the borrower.

Margin

15% of the cost of Articles.

Security

For loan upto Rs.50,000/-, hypothecation of goods / articles purchased out of loan.
For loan above Rs.50,000/-, in addition to hypothecation, Collaterals equal to 50% of loan amount should be obtained.

Repayment

Repayable in 48 EMIs commencing from the next month of disbursement.

In case of Farmers, the repayment term may be fixed as per harvesting period.

Post dated cheques for the entire repayment schedule should be collected at the time of disbursement of loan.

In case of permanent salaried employees of Govt/Local Self Govt/PSUs/Defence, the condition of post dated cheques may be waived in case -

* they produce an irrevocable undertaking from their employer to deduct the monthly installments from their salary and remit the same to the Bank,
OR

* whose salary is routed through the accounts with Branch

Branches should ensure to encash the cheques on due dates and credit the amount to the loan account.

Rate of Interest

BPLR + 1.00%

Reduction in rate of interest by 0.50% may be considered in case liquid securities like NSC/KVP/FDR are offered equal to the loan amount. NSC/KVP should be marked lien of our Bank at the concerned Post Office.

Guarantee

Personal guarantee should be obtained whose worth is not less than the loan amount except in case of any collateral security is offered, the market value of which is not less than the loan amount.

Sanctioning Authority

All delegates within their sanctioning authority.In case of Staff applicant the sanctioning authority will be as under:

* If applicant is staff and officers up to scale III working in the region and Regional Office, loan will be sanctioned by Regional Manager.

* If applicant is staff and officers up to scale III in ELBs / VLBs, loan will be sanctioned by respective Chief Manager/Assistant General Manager.

* If applicant is officers in scale IV & V in Zone (including Assistant General Managers posted at Zonal Office, Regional Office, ranches, RRBs) and staff and officers in Training Colleges and other Administrative Offices will be sanctioned by Zonal Managers.

* In case of staff and officers posted at Central Office the loan will be sanctioned by CM(CSD) and above subject to the condition that the sanctioning authority is one scale above the applicant.

Processing Charges

1% of the loan amount subject to minimum of Rs.100/-.The amount should be recovered at the time of disbursement.

Disbursement

The borrower should submit a declaration that he/she will be purchasing the articles as mentioned in the loan application and the said declaration will be attached to the hypothecation agreement and would form part of agreement. On the basis of the said declaration the amount may be disbursed to the borrower to the credit of his account.

Documentation

Letter of Hypothecation.

Articles of Agreement.

Letter of interest and interest revision letter.

Letter of guarantee wherever applicable,

Letter of undertaking from the borrower for comprehensive Insurance of the articles with bank clause to cover the risk of theft fire, destruction etc.

In case of liquid security like NSC/KVP/FDR/LIC etc are offered, proper charge in favour of bank should be created.

Sources : http://www.centralbankofindia.co.in/