Banks plans lifeline to help students, boost education loan segment

In the current situation when the job market is depressing, the salaries might not be enough to fit in your repayment plans. Number of nationalized banks including State Bank of India, which is the market leader for education loans are planning lifeline for the students who want to take education loan but are not able to take because of the depressing situation of the market.

Banks say they will certain that the students hit by the current downturn do not get penalized in case they are not able to keep up with EMIs. Banks further said if the students approached who find difficulty in paying back loans, these banks will on their part in order to help students on a case-by-case basis reschedule loans.

A spokesperson for SBI, which has a 24% share in education loans informed, "After all, we don't want a student to sell his father's house because he cannot pay back an education loan''.

Spokesperson further added, "Repayment starts one year after the course gets over or six months after the student gets a job, whichever is earlier. But if a student faces a financial problem and finds it difficult to repay the loan on time, we will obviously not put further stress on him''.

Its not only SBI, Vikas Chhapekar, general manager for Bank of Maharashtra's Mumbai circle pointed out, "In case a student is unable to repay an education loan, we will definitely help him out, and either extend the date from which the student must start repaying the loan or increase the duration for over which the loan has to be repaid”.

Bank of Baroda, too, will be taking care that students don't suffer. A K Agarwal, a senior manager at Bank of Baroda branch pointed out, "My heart goes out to students at a time like this. If student approached who cannot repay his loan, we will, after clearance from the top, help reschedule.''

Sidharth Gupta, who graduated from IIM-Bangalore this year said, "This is obviously re-assuring. Banks already have a rather relaxed system of repaying an education loan. But for those who do not want to take on the burden of repaying their loans right away and feel they will be in a better position to do so next year, it helps to know that banks may re-negotiate the terms of the loan''. Varun Shourie, a post-graduate student at the Mudra Institute of Communications, Ahmedabad, informed he will be happy with any move on the part of banks to restructure loans.

Reverse Mortgage

Reverse mortgage helps you to make use of the equity that is trapped in your home. Unlike, a traditional mortgage which may be referred to as diminishing debt and increasing equity, reverse mortgage is increasing debt and diminishing equity.

Reverse mortgage can be of immense help to the elderly. In fact, only people of the age 62 and above qualify for reverse mortgage. Reverse mortgages are loans that are secured against a home. And unless the borrowers die, move away, relocate permanently or sell off the house, no payment is required to be made. There is no income requirement either. The place has to be the primary place of residence.

You can opt for 2 types of reverse mortgage loans. They are private reverse mortgage loans and Home Equity Conversion Mortgage (HECM). The HECM types constitute approximately 90% of the reverse mortgage loan types. The Fed insures the HECM loans. In case of private loans, the lenders are at risk. Both types have their own benefits and drawbacks.

In case of HECM, the best part is that these loans are insured by the Fed. The drawback is that the appraisal in case of HECM is capped by the Federal Housing Authority. So, if you have a house that is quite expensive, it is better to opt for private reverse mortgage loans. In this way the appraisal will not be capped and you can avail a loan of a bigger amount.

Scenario
A couple from Arizona opted for reverse mortgage from a private lender. When they applied for the loan, they found out that HECM would be lending 45% of the value of their home (USD$540,000). On the other hand, they discovered that a private lender was willing to lend 65% of the property value.

However, the amount you can get also depends on a number of other factors like age of the borrower, location of the house, interest rate etc. The amount that you can borrow differs from one place to another. It cannot exceed USD$417,000. The process begins with inspection and appraisal. The proceeds of a reverse mortgage can be availed as lump sum, line of credit or monthly payments.

Allahabad Bank to make its marks in southern states

Allahabad Bank a public sector lender is ready to expand its marks in the south with the opening of 24 branches in four southern States in the current fiscal year as reported by CMD K.R. Kamath.

At the inauguration of the zonal office, the 44th in the country and its maiden one in the south, in his speech said that there are plans to open nine more branches in Tamil Nadu, six in Andhra Pradesh, three in Kerala and six in Karnataka.

Speaking about the bank's initiatives in reformation of its business, he informed that the level high cost deposit had been brought down from Rs 20,000 to Rs 15,000 during the current fiscal, comprising 17 per cent of its business as against the earlier figure of 28 per cent.

He informed the bank will be starting trading in gold from Akshaya Trithiya day this year.

The CMD pointed out that its credit off take is moving towards its target and the bank expects it to be in the range of 20 per cent year-on-year during this fiscal year.

Regarding bank's hiring plans; he told it has a plan to take in 2,000 people this year which includes 1,000 in the clerical grade and 1,000 officers.

At present bank is having 2,295 branches.

DBS bank 3 more branches to come up in India

Singapore-based DBS Bank will be expanding its branch network in India. Banks three more branches will come up in this year. The bank, had started its operations in 1994 in India, at present is having seven branches.

Sanjiv Bhasin, chief executive officer, DBS India stated, “Our aim is to extend the network of branches and increase customer base in India. As part of this, we are opening three new branches shortly — one each in Moradabad (Uttar Pradesh), Salem (Tamil Nadu) and Surat (Gujarat)”.

He was addressing the reporters after the opening of bank’s latest branch in Nashik recently. DBS Bank’s other six branches are located at Mumbai, Bangalore, Chennai, Kolkata, New Delhi and Pune.

DBS Bank, one of the largest financial services groups in Asia, is carrying out operations across 16 countries, including China, Hong Kong, Indonesia and Taiwan.

Union Bank of India robbed off Rs 5.86 lakh in cash by unidentified men

In a daylight incidence at the Dombivli branch of Union Bank of India three armed men who went into the bank to open an account made way with Rs 5.86 lakh in cash. They also robbed the staff of two mobiles and a gold ring. Till now police has not made any arrest.

Dattatrey Karale, deputy commissioner of police told the incident occurred around 3.30 pm at the Sagav area in Dombivli (E) when the bank was about to close for the day.

The bank does not have any security guard or any surveillance system. Moreover the unidentified robbers plan was so precise that no bank staff showed any resistance.

The three made an entry into the bank in order to open a savings account. On noticing that there are minimum chances of getting resistance from bank staff the three men made use of the opportunity and pulled out their weapons and threatened the bank staff demanding the cash. After clearing the reserves, they threatened two bank employees and took away their mobile phones and a gold ring. The trio robbers then fled on a scooter.

The three men were not wearing any mask to hide their identity. This shows that robbers did not find any difficulty in getting in and out of the bank. Police has launched manhunt to the arrest the three robbers.

Banks cannot deny education loan on the bases of parents repay capacity

The Madras high court in its judgment said in case banks persist on the repayment capacity of parents and refuse educational loans to students, it will beat the very purpose of the government’s welfare scheme.

The court instructed the Tirupattur branch of the State Bank of India to give an educational loan to M Rajeswari, who had scored 1,075 marks in the Plus Two examination and got admission in an engineering college in Chennai, Justice K Suguna told that the government had taken a policy decision to extend loans up to Rs 4 lakh without any security. "This is the policy of the government...it will mean that the government is willing to advance loans to poor students with an intention that they should not be denied their higher education on the ground of lack of finance..."

On the denial of the educational loan Rajeswari filed the writ petition, in which she stated that she required Rs 3.3 lakh towards tuition fees and hostel fees for the entire course period. But when she approached the bank, it rejected her plea in November 2008 on the grounds that her grandfather had defaulted on a tractor loan taken from the bank for which her father stands as guarantor. Therefore, it notified, Rajeswarai is not eligible for the loan.

Justice Suguna, did not get convinced with the bank's view and said the object of the educational loan scheme is to ensure that poor students can pursue higher education without any financial difficulty. Speculating that how Rajeswari can be punished for the default of her grandfather, the judge notified the unpaid balance of her grandfather's loan was only Rs 80,000, which amounts to about Rs 2 lakh now. She stated that the bank is in possession of a two-ground land furnished as surety for the earlier loan.

But, as a measure of protection for the educational loan, she asked Rajeswari to provide an affidavit stating that she will be clearing the loan within three years from the date of securing a job. Till then, the bank can keep hold of the land document. The judge directed the bank to sanction the loan within two weeks of Rajeswari giving the undertaking.