NOW, CENTRAL BANK OFFERS LOANS FOR ENTRANCE EXAM COACHING

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.

Scope

Talking about the scope and need for such a product the official said, “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,” he said.

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, the official said.

The bank is also looking to tie-up with reputed coaching classes, he added. It would be on a selective basis and the bank would insist on conditions such as the institution should have been in existence for at least five yeas and must have shown good academic results.

Retail loans

This is one of the products the Central Bank is planning to increase its retail loans portfolio, which

at present accounts for slightly over 10 per cent of total advances. In the quarter ended September 30, 2010, retail loans grew by 24 per cent to Rs 12,206 crore, from Rs 9,825 crore last year. The bank is planning to increase its disbursements by an additional Rs 3,600 crore by March 2011, the official added.

SOURCE: http://www.thehindubusinessline.com/2010/10/30/stories/2010103052260700.htm