Friday, March 26, 2010

How to complain against the Branch, if injustice is done?

ELTF has been getting lot of mails as to how public can complain when they do not get justice from the branches of banks.   Normally, we come across the following types of complaints:
General complaints against banks
1.  When highly deserving and poor students / parents approach the banks, the branch officials do not guide them properly; they are asked to come several times and whenever they come, they are asked to bring new documents.  Branches do not demand required documents in a single time.
2.  As per IBA guidelines, branches should not demand collateral security, margin and third party guarantee for loans less than 4 lakhs.  But many branches demand securities even for loans upto 4 lakhs.
3.  When the loan is disbursed, interest will be calculated on a simple basis and will be added to the principal amount, after the student completes the studies.  Principal and interest will be added and repayment will be fixed by the banks. The students, if they are poor, they can pay the interest after they complete the studies.  Payment of monthly interest is only optional and not compulsory and  can be deferred till the completion of studies.  Many branches insist on payment of monthly interest from the students, who cannot afford to pay.  They have to resort to outside borrowing to pay monthly interest.  In some cases, managers refuse to disburse further instalments of loans, if the students do not pay monthly interest.  Compelling to pay monthly interest is violation of IBA guidelines.
How to complain whenever the students face problems?
1.  If the students find that the branches are violating the RBI/IBA guidelines, they can meet the branch manager and request him to follow the guidelines.  If required, the aggrieved students can seek guidance from ELTF through email for correct procedures. Students can give a letter  to the bank in writing and seek a reply in writing. 
2.  If the Managers do not accept your request or still  if  you feel that they violate the guidelines, you may meet the Regional manager of the bank and discuss with him.  All the branches will display prominently, the names of higher authorities and their contact numbers in their office.  
3.  If you are still not satisfied with the response of the Regional manager, you can take up with the Chairman of the concerned bank through email giving full details of your problems.  The email ids of all the bank chairmen are given below.
4.  If you are not satisfied with the bank's response and if you want to take up with Reserve Bank of India, you may also write a letter to The Chief General Manager, RPCD, Reserve Bank of India, Central Office Building, 10th Floor, Shahid Bhagat Sing Marg, Mumbai 400001 - Phone 022 22610261.
5.  You can also approach the judiciary for any grievance, through your advocate any time.  But when you approach courts, it may be time consuming and the banks will have a right to defer the decision, till the judgment is delivered.  
5.  Before making a complaint to higher authorities, please convince yousrelf that you have a strong case and you have not been given justice.  Please do not send complaint for the sake of sending complaints.  
Whenever the students need any clarification on the rules and procedures, they can send mail to ELTF and seek the guidance.
E-Mail IDs of Public Sector Banks

Name of the Bank
CMD's E-mail Address
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank Limited
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab and Sind Bank
Punjab National Bank
State Bank of India
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank

Tuesday, March 16, 2010

Education Loans - How banks have performed?

The following table gives the information of the outstanding advances under education loan and the total bank credit as at last Friday of March 2009.  All the PSU Banks put together have given finance to 15.80 lakh students amounting to 26925 crores.  The total bank credit as at that day was 22.83 lakh crores. The education loan constitutes only 1.18 percent of their total bank credit.
Please look at the performance of individual banks in the following table.

Source : RBI website
March 2009
(No. of Accounts in lakh and Amount in Rs. crore)
Bank Group / Bank As on the last reporting Friday of March
Education Loan
Total Bank credit
No.of Amount
Amount %
Accounts Outstanding
crores edu loan
(1) (2)
(5) (6)
A. State Bank Group 5.28 9469 747871.48 1.27
State Bank of India 3.14 6182
549296.81 1.13
State Bank of Bikaner and Jaipur 0.15 280
30088.10 0.93
State Bank of Hyderabad 0.46 836
43937.72 1.9
State Bank of Indore 0.10 165
21746.58 0.76
State Bank of Mysore 0.23 391
25869.88 1.51
State Bank of Patiala 0.21 245
43960.81 0.56
State Bank of Travancore 0.99 1370
32971.58 4.16

B. Nationalised Banks 10.52 17457 1535601.92 1.14
Allahabad Bank 0.30 638
59443.40 1.07
Andhra Bank 0.75 1391
44427.60 3.13
Bank of Baroda 0.60 1165
144844.87 0.8
Bank of India 0.75 1324
144731.56 0.91
Bank of Maharashtra 0.17 315
34817.28 0.9
Canara Bank 1.47 2301
139036.91 1.65
Central Bank of India 0.53 811
86740.27 0.93
Corporation Bank 0.32 664
48927.12 1.36
Dena Bank 0.13 241
29185.36 0.83
IDBI  Bank Ltd. 0.03 52
103915.07 0.05
Indian Bank 1.28 1591
51830.64 3.07
Indian Overseas Bank 0.78 1033
75809.54 1.36
Oriental Bank of commerce 0.36 770
69064.72 1.11
Punjab National Bank 0.93 1611
156098.45 1.03
Punjab & Sind Bank 0.06 179
24698.10 0.11
Syndicate Bank 0.81 1150
82495.04 1.39
Union Bank of India 0.53 957
69669.05 1.37
United Bank of India 0.20 344
98264.85 0.35
UCO Bank 0.28 490
35727.45 1.37
Vijaya bank 0.24 431
35874.63 1.2
Public Sector Banks (A+B) 15.80 26925 2283473.40 1.18
Note : Data are provisional.

Source :RBI

Monday, March 15, 2010

ELTF initiative - Special Mention in Rajya Sabha about Education Loan under Rule 180A

dear friends
Members are aware that under India Vision group, we have formed Education Loan Task Force (ELTF) to create awareness about education loan procedures among highly deserving poor students.  We have also been taking up the cases, where such poor students are harassed ny the banks,  with concerned Chairman and RBI.
Mr T K Rangarajan, Member of Parliament (Rajya Sabha representing CPI M) has been supporting our initiative since the beginning.  Today he made a 'Special Mention' in the Rajya Sabha about the Education Loan under Rule 180A.  Under this rule, matters of serious public importance can be brought to the notice of the Government as "Special Mention".  This will be taken up on priority basis by the Government and concerned Minister (in this case Finance Minister) will be giving his reply personally to Rajya Sabha shortly.
I spoke to Mr Rangarajan over phone (he is now in Delhi)  and thanked him on behalf of ELTF.  He said after he made the mention in the Rajya Sabha about this issue, few MPs cutting across party line, came to his seat and congratulated him and offered their support for this issue.  I am confident that due to the mention in Rajya Sabha, and the support of passionate MPs, this issue will gain more importance.  Mr Rangarajan said that he would also personally discuss this issue with Hon'ble Finance Minister.
On behalf of ELTF and Action 2020 Team of India Vision Group, we place on record our deep appreciation to Mr T K Rangarajan MP and other Parliamentarians, who offered to extend support to our initiative.
Please read the 'Special Mention' made by Mr Rangarajan MP in Rajya Sabha today (15th March 2010).
This century is considered as education century and education loan is an important one for the future development of India.  The students from very poor families who score high marks find very difficult to pursue higher education due to their poverty.  There is no uniformity of rules in sanctioning Education Loan by nationalised banks and the applicants have to undergo lot of hurdles.  Though RBI and IBA have given guidelines, many banks demand collateral security, guarantee even for the loan less than Rs.4 lakhs, insist on payment of monthly interest, insist on margin money ; charge higher rate of interest, etc.  Many brilliant poor students either go in search of NGOs for support or resort to borrowing at higher rate of interest.  Many deserving students could not pursue higher education due to lack of finance.  Banks hesitate to give education loan to highly deserving, brilliant poor students.
Educating the students is an important task of any Government.  And imparting higher education is an investment  on human resources and hence the educational loan should be interest free.  It should also advise the nationalised banks to popularise the education loan schemes through exhibition and advertisements.  The Government should immediately instruct nationalised banks to improve the disbursement of education loans.
The Government  for encouraging the banks to lend without hesitation may think of introducing credit guarantee for such loans.  The government may also think of susidising part of the loan disbursed by the banks to the students. 
K. Srinivasan
Prime Point
91766 50273

High Court directs Bank of India to pay costs for denying education loan
Bank directed to pay Rs.5000 as costs to student for denying loan
Special Correspondent

CHENNAI: The Madras High Court has directed a nationalised bank, which refused to sanction educational loan to an engineering student, Rs.5000 as costs to him. It directed the bank to sanction the loan within two weeks.
Petitioner R. Dinesh stated that he was doing first year aircraft maintenance engineering at the Park School of Aeronautical Science in Coimbatore. He had applied in September last year to the Bank of India (BOI), Mallikarai branch in Salem district, for an educational loan of Rs.6.43 lakh. His father was a co-applicant.
The bank informed his father that the application was rejected as the course opted for by the petitioner had not been approved by the bank. The petitioner contended that the course had been approved by the Directorate-General of Civil Aviation. More than 10 students studying the same course in the same class had received loans from nationalised banks. Two had received loans from BOI's other branches. Therefore, the action of the bank was discriminatory.
Justice N. Paul Vasanthakumar said the bank's action was whimsical and discriminatory. If the bank branch to which the petitioner had submitted the loan application was not aware of the notification of the scheme, it could have sought guidance from the head office.
As held by a Division Bench, the bank being a nationalised one was bound by the scheme framed by the Centre and RBI. No other reason had been stated in the counter affidavit to deny the loan. As the petitioner was forced to file this petition, the bank branch was bound to pay costs to the petitioner.

All About Education Loan Schemes

To know more about education loan schemes in India, please download the ezine on Education Loan from the following link:

Indian Banks' Association has evolved a Model Scheme which has been adopted by all the Banks.  The Model Scheme can be downloaded from the following link (pdf 120k).

A preview of the model scheme:

Education Loan Task Force (ELTF) launched at Chennai

India Vision online group and Action 2020 Team have been getting frequent requests from many meritorious poor students appealing for funds, as they could not get any bank loans for higher education. All along, partner groups of Action 2020 team have been supporting few of them, collecting funds from the members. On further examination, Action 2020 team found that all these students hailed from very poor families and the banks did not respect them properly for their demands.
Corporate ezine PR-e-Sense Jan 2010 issue carried the model scheme from IBA for education loans, along with the interview from RBI Deputy Governor. The core team of Action 2020 team decided to form an "Education Loan Task Force (ELTF)" to take up such cases where highly deserving poor students were harassed. In the Feb 2010 alone, the Task Force took up 5 genuine cases with the different banks and all the problems were resolved within two days.

This encouraged Core Team to make the ELTF formal and wanted to train volunteers of Action 2020 Team to spread the awareness across the State. The first ELTF meeting was held at Thakkar Bapa Vidayalaya, Chennai (Mahatma Gandhi stayed in this campus and he inaugurated this Vidyalaya in 1945).

Around 40 volunteers from the partner groups participated in this meeting. Senior level officials from State Bank of India, Indian Bank, Canara Bank and Inian Overseas Bank participated in this ELTF Meeting. Many eminent personalities of the City like Mr Desikan (Founder, Consumers Association of India), Mr Maalan (Well known journalist and Editor), Mr Rajasekar (Mg. Trustee, National Agro Foundation), Dr Santhosh Babu IAS (Mg. Director, ELCOT and Director, E-Governance of TN Govt.) and many senior journalists participated. Com. T K Rangarajan MP sent his representative to observe the proceedings and to brief him back.

The interaction between the volunteers and the Banks were really fruitful in a cordial atmosphere and enable to understand each others problems.

Some of the problems faced by the students from banks:
  • Students are asked to go to pillar to post by the Branch officials and they are not given proper response;
  • Demanding of collateral security / guarantee even for smaller amount;
  • Insisting on payment of interest every month, before completing the studies;
  • Branch officials not aware of education loan procedures and giving scant respect to the students with poor background, etc.
Some of the problems faced by the bankers:
  • Students from unaunthorised colleges and unauthorised courses demand education loan;
  • Students demand loans for courses, which can not provide employment (Eg. teachers training courses);
  • Since banks are lending funds, some of the colleges inflate their estimates to get more money, which will ultimately make the students as heavy borrowers. Even many colleges send the estimates as Rs.3,99,500/- to avoid offering collateral security. Banks are unable to confirm the genuiness of the proposals.;
  • Some of the students, who availed edu loan from banks shift their places without informing the bank and do not even repay the loans. this causes lot of difficulties for the banks and the officials;
  • The colleges do not give estimates on admission. Without estimates, banks cannot process the loans.
There were suggestions from the bankers whether the University certificates of the students could be marked with 'Red strip' to indicate the Edu loan. This would caution the employers to remit the dues to the banks concerned.

Dr Santhosh Babu IAS, Director E Governance, Tamilnadu Government offered to provide a software interfacing between the banks, colleges and the district collectors. If this is implemented, this will be the first of its kind in India and would remain as model for other states. Shiva and Ravi, coordinators of Action 2020 Team and ELTF will coordinate this software project.
The Action 2020 finalised the template for supporting the students. It was also resolved to help minimum of 100 highly deserving, but poor students to avail education loans from banks. All such students will be allotted with a mentor who would guide him through the studies and also create awareness about the bank rules, prompt repayment etc.

If any information is needed on ELTF, send a mail to

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