The Lakshmi Vilas Bank Ltd

The Lakshmi Vilas Bank Ltd Education Loan:

Lakshmi Vilas Bank was founded in 1926 by a group of seven progressive businessmen of Karur under the leadership of Shri V.S.N. Ramalinga Chettiar. Their objective was to cater to the financial needs of people in and around Karur who were occupied in trading businesses, industry and agriculture. The bank was incorporated on November 3, 1926 under the Indian Companies Act, 1913, and obtained the certificate to commence business on November 10, 1926. Subsequent to introduction of the Banking Regulations Act, 1949 and Reserve Bank of India as the regulator for the banking sector, the bank obtained its banking license from RBI on 19,June 1958, and on 11, August 1958 it became a ‘scheduled commercial bank’ signifying capability to operate as a full-fledged commercial bank.

Lakshmi Vilas Bank saw considerable expansion of its branch network during the period 1961-65, when the bank took over nine other banks. From 1974, the bank started expanding the branch network beyond Tamil Nadu to benefit from opportunities in the pan-Indian market. Thus, branches were established in the neighbouring states of Andhra Pradesh, Karnataka and Kerala, important financial centres such as Mumbai, New Delhi and Kolkata as well as in other significant business centres in Maharashtra, Gujarat and Madhya Pradesh. Meanwhile, the bank attained the status of Authorized Dealer in foreign exchange in 1976 enabling it to provide full range of services to customers engaged in international trade and to overseas travellers. Mechanization was introduced in the Administrative Office as early as 1977, and data processing and computerization began in right earnest in 1993 by the bank’s own in-house team. Implementation of Core Banking Solution (CBS) was started in October 2006, and all of the bank’s branches were migrated to CBS by March 2008.

Currently, our operations are spread over a network of 370 branches (with 8 extension counters) in 15 states and the Union Territory of Puducherry, supervised by 8 Regional Offices. We have 20 “B” Category Branches. We have 640+ ATMs. Our extensive branch network in Tamil Nadu, one of the more progressive and industrialized states in the country, provides us a solid market base of business and customers. We are active across the entire spectrum of customer segments - retail, mid-market and corporate. Through our branches, we offer a host of para-banking products in association with Life and General Insurance companies, mutual funds, stock broking houses, money remittance companies, etc. With continuous investments in technology, all of our services are offered on a technologically advanced platform.   

We benchmark our operating standards continuously with the best practices in the banking industry, so as to ensure that our customers always receive services with high level of satisfaction. We take special pride in the fact that we are able to offer personalized services drawing inspiration from our rich heritage, even as we have moved over to the latest in technology. We recognize that we are truly in the business of bringing prosperity to all our stakeholders, and seek continuously to live up to the motto ‘life smiles where LVB serves’.

Our vision:

“To be a sound and dynamic banking entity providing financial services of excellence with pan-India presence”.

Our mission:

“To develop a range of quality financial services and products to create value for customers, shareholders and the society; to motivate people to achieve excellence in performance leading to sustained profitable growth and build a vibrant organization.”

Our logo

The colour red symbolizes pure and strong values. 

The colour of ochre gold in the logo signifies prosperity and wealth.

The circle of kumkum holds within it all good things.

The logo symbolizes our invitation to walk the path of Lakshmi and celebrate her blessings, wisdom, growth and contentment and a life full of rich meaning.

Purpose:

To meet expenses connected with the pursuit of specific courses of study at recognized institutions, including professional/job-oriented courses, which offer reasonable opportunity for employment & loan repayment capacity on successful completion.

Eligibility:

Student eligibility :

Should have secured admission to professional/technical courses in India or abroad through entrance test/merit based selection process after completion of HSC (10 plus 2 or equivalent).

However, entrance test or selection purely based on marks obtained in qualifying examination may not be the criterion for admission to some of the post graduate courses or research programmes. 

In such cases, appropriate criteria will be adopted based on the employability and reputation of the institution concerned.

Courses eligible:

Studies in India:     

Regular Degree/Diploma courses like aeronautical, pilot training, shipping, degree/diploma in nursing or any other discipline, approved by Director General of Civil Aviation/Shipping/Indian Nursing Council or any other regulatory body as the case may be, if the course is pursued in India.

Studies abroad:    

Degree/Diploma courses like aeronautical, pilot training, shipping, etc. provided these are recognized by competent regulatory bodies in India/abroad for the purpose of employment in India/abroad.

Expenses eligible for finance:  

Purchase of computer at reasonable cost essential for completion of the course.

LOAN AMOUNT:

Need based finance subject to repaying capacity of the student with margin and the following ceilings:

For studies in India: 

Maximum up to Rs. 10.00 lacs.

For studies abroad: 

Maximum up to Rs. 20.00 lacs.

Within the above maximum levels, the loan amount is to be fixed taking into account the minimum stipulated margin, the expenses eligible for finance, actual requirement of the student, anticipated repayment capacity of the student on completion of the course, etc. 

While appraising the loan, the future income prospects of the student alone will be looked into. 

The above ceilings fixed for studies in India and abroad correspond to the limits fixed by RBI for treatment as priority sector lending.

It would, however, be open to banks to consider higher quantum of loan on a course to course basis like IIMs, ISB, etc

MARGIN:

For loans up to Rs.4.00 lacs: 

Nil

For loans above Rs.4.00 lacs:

Studies in India: 

Minimum of 5%.

Studies Abroad: 

Minimum of 15%.

Scholarship/assistantship to be included in the margin.

Margin may be brought in on year-to-year basis as and when disbursements are made on pro-rata basis.

(In the case of highly meritorious/ deserving students, relaxation in the margin may be allowed up to the minimum level of 3% & 8% for studies in India & abroad respectively from the normal stipulation of 5% & 15% in cases of loans above Rs.4.00 lacs at the level of General Manager.)

INTEREST RATE

For Boy Students: 

Loans up to   Rs.4.00 lacs:  Base Rate + 3.25% (PER: 14.50% p.a.)

Loans above Rs.4.00 lacs:  Base Rate + 4.25% (PER: 15.50% p.a.)

For Girl Students: 

Loans up to   Rs.4.00 lacs: Base Rate + 2.75% (PER: 14.00% p.a.)

Loans above Rs.4.00 lacs : Base Rate + 3.75%( PER: 15.00% p.a.)

Interest will accrue on simple interest basis during the holiday period and such accrued interest of the holiday period will be added to the principal amount at the beginning of the repayment period for calculation of the repayment in EMIs.  The effective interest rate during the holiday period and the EMIs during the repayment period are subject to change depending on the PLR/Base Rate quoted by the Bank from time to time.  

On overdue amounts, penal interest @ 2% p.a. will be charged additionally for the overdue period in respect of loans above Rs.2.00 lacs. Students belonging to Economically Weaker Sections (EWS) with an annual gross parental/family income of Rs.4.50 lacs per year (from all sources) are eligible for interest subsidy during the period of moratorium on education loans taken by them from banks for studies in India under the IBA Model Educational Loan Scheme as per the Central Scheme for Interest Subvention (CSIS) announced by the Govt. of India, Ministry of Human Resources Development.

The interest subsidy is applicable only for loans given for Professional and Technical courses (after 12th Standard) in India. Interest subsidy can be extended in respect of courses where the fee structure is more than Rs. 10.00 lacs. However, interest subsidy should be calculated for loans up to Rs.10.00 lacs only.

Servicing of interest during study period and the moratorium period till commencement of the repayment is optional for the student.

Where a Holiday Period is allowed, interest concession of 1% to be allowed on the interest payable during the Holiday Period if interest is serviced during the Holiday Period.  Alternatively, if the student undertakes to repay the loan without any Holiday Period, the same may be accepted and repayment may be fixed accordingly.  This fact has to be clearly stated in the loan application/ appraisal

LOAN PROCESSING FEE:

NIL

Security:

Up to Rs.4.00 lacs:

Co-obligation of parents/grandparents.  

No security.

Above Rs.4.00 lacs and up to Rs.7.50 lacs: 

Co-obligation of parents/grandparents together with collateral security in the form of suitable third party guarantee. 

The bank may, at its discretion, in exceptional cases, waive third party guarantee if satisfied with the net-worth/means of parent(s)/ grandparent(s) who would be executing the document as “joint borrower”.

Above Rs.7.50 lacs:

Co-obligation of parents/grandparents together with tangible collateral security of suitable value, along with the assignment of future income of the student for payment of instalments.

In the case of married person, co-obligant can be either the spouse or the parent(s)/parents-in-law.

Note:

The loan documents should be executed by both the student and the parent/guardian/grandparent/spouse as joint-borrowers.

The security can be in the form of land, building, Govt. securities, Public Sector Bonds, NSC, KVP, LIC Policy, jewels, bank deposit in the name of the student/parent/guardian or any other third party with suitable margin.

Wherever the land/building is already mortgaged, the unencumbered (residual) portion can be taken as security, on second charge basis provided it covers the required loan amount.

In case the loan is extended for purchase of computer, the same is to be hypothecated to the Bank.

GUARANTEE:

The loan documents are to be executed by both the student and the parent/guardian/grandparent/spouse as co-borrowers.

However, where collateral securities of third parties are obtained, the guarantee of the owners of the security is to be obtained.

LOAN PERIOD, REPAYMENT OF PRINCIPAL & INTEREST:

Holiday Period:   Course period* + 1 year or 6 months after employment, whichever is earlier. (Holiday period could be extended up to 24 months after completion of the studies.)

(*The courses for which loans may be extended should not exceed 5 years.)

Repayment Period:  The principal & interest (including interest accrued during the holiday period) to be repaid in EMIs as follows:

For loans up to  Rs.7.50 lacs: 

up to 10 years

For loans above Rs.7.50 lacs: 

up to 15 years

Note: 

If the student is not able to complete the course within the scheduled time, extension of time for completion of the course may be permitted for a maximum period of 2 years by an authority at least one level above the sanctioning authority.

Interest will accrue on simple interest basis during the Holiday Period and such accrued interest of the Holiday Period will be added to the principal amount at the beginning of the Repayment Period for calculation of the repayment in EMIs.

DOCUMENTATION:

Application form & appraisal form as prescribed in our circular instructions.

Certified copy of admission letter issued by the college/university/ institute.

Certified copies of relevant past academic records, including mark sheets, examination/degree/ diploma certificates, etc.

Copies of prospectus, syllabus and full details of course of study along with details of tuition fee & other fees payable.

Testimonials from two professors/ teachers of the college/school last studied.

Copy of IT/WT assessment orders of the parent/grandparent/ guardian, if an assessee.  If the student himself is an assessee, then copies of the latest IT/WT assessment order pertaining to his income/wealth.

Form 111 of the parent/guardian / grandparent/student.

Legal opinion and valuation report on the property offered as collateral security.

In the case of students going abroad, besides the above, copies of the Passport, Visa, details of scholarships/assistance if any and the necessary evidence of admission to the institution abroad, etc. to be obtained and verified with the originals. 

Stamped forms:

F. No: 600 (A)- Demand Promissory Note 

F.No.83 (R) - Letter of undertaking for repayment of instalment.

F. No. 451-Letter of authority.

F. No. 353- Educational term loan agreement (Stamped form)

F.No.200 (R) - Letter of Guarantee (Stamped form).

F.71 - Memorandum of deposit of title deeds.

Note:

There is no specific restriction with regard to the age of the student to be eligible for education loan. 

However, if the student was a minor at the time of execution of the documents for the loan, a letter of ratification from the student borrower should be obtained upon attaining majority.

OTHER CONDITIONS:

Vidya Lakshmi Loans are to be sanctioned subject to the following general conditions:

The student should not change the course of study for which the loan has been extended or the educational institution without the Bank’s prior permission.

Any change in the permanent residential address of the borrower/ parent/guardian/guarantor should be duly informed to the Bank.

Details of employment secured by the student after completion of the course of study should be informed to the Bank.

The student should comply with all the rules & regulations of the educational institution and should not participate in any unlawful activity, which would debar him from pursuing the course of study.

Disbursement of the loan should be by way of direct payment to the institution or the suppliers of the goods and services with whom the eligible expenses are incurred against proper bills/ receipts, etc.

Disbursement by way of reimbursement of expenses already incurred may also be considered by the sanctioning authority in genuine cases provided:

the expenditure should have been incurred  within  the  past  6  months,

the sanctioning  authority  should verify the original receipt and satisfy himself as to the actual payment, and

the total disbursement  by  way  of  reimbursement should  not  exceed  25%  of  the  loan     amount.

if the requirement for the eligible expenditure is on a year-to-year basis, the loan should also be disbursed on a year-to-year basis, subject to the stipulated margin requirement, on pro-rata basis.

The Bank may with the consent of the student borrower arrange for whole-life insurance policy to cover their liability under the loan and assign the same in favour of the Bank. 

Banks to contact college/university authorities to obtain progress report on the student at regular intervals in respect of those who have availed loans.

The sanctioning authority may also issue capability/solvency certificates to the students going abroad after obtaining the required financial and other supporting documents from the borrower and taking into account the availability of funds from the sanctioned loan.

No due certificate need not be insisted upon as a pre-condition for considering Vidya Lakshmi Loans. However, a declaration/affidavit confirming that no loans are availed from other banks may be obtained.

Loan applications will be received either directly at bank branches or through on-line mode.

Upon receipt of the application, standard acknowledgement giving a reference number will be issued.

The acknowledgement will contain contact details of the bank official who could be contacted in case of delay in disposal of the application.

Loan applications for Vidya Lakshmi Loan scheme are to be disposed within a period of one month, but not exceeding the time norms stipulated for disposing loan applications under priority sector lending.

No application for education loan received should be rejected without the concurrence of the next higher authority.

Application for education loans received at branches should be disposed of within the time frame on objective basis and without delay.

Application for education loans should not be rejected without proper reason.

Bank may consider top up loans to students pursuing further studies within the overall eligibility limit, with appropriate re-schedulement, subject to obtaining the required security.

Education loans are eligible for special asset classification benefits upon restructuring, subject to fulfillment of necessary conditions set out in the RBI circular on restructuring.

The terms “meritorious” and “deserving” are not specifically defined in the model education loan scheme of IBA. It has to be interpreted on a case-to-case basis. Both the terms go hand in hand and are interdependent rather than independent.

While considering the loan application for education loans, the terms have to be interpreted not only on the basis of the meritorious academic performance of the applicant but a host of other factors like the social status, the economic background, the criteria on which admission has been accorded to the student by the respective college/ University, the geographical location, the broad objective of the scheme, etc.

If the student has obtained admission to an eligible course through a merit based selection process, he/she should be considered a meritorious student.

Similarly, admission to professional and technical courses is through common entrance tests and those who get admission through this process could be considered meritorious.

Where the admission is purely based on the marks scored in qualifying examinations, the banks are permitted to fix cut-off marks (percentage) for loan eligibility. Accordingly, it is proposed to fix the cut-off marks in our Bank as 90% for general category of boy students and 85% in case of girl students. In respect of SC/ST/OBC, etc. the percentage of marks may be at the level of 80%.

Since education loan is given for an individual and the limit of Rs.4.00 lacs is also for an individual i.e. education loan is not a loan for a family as a unit, any number of applications belonging to the same family may be sanctioned up to Rs.4.00 lacs individually without insisting for any security.

Service area norms are not applicable to education loans. As such, education loans may be sanctioned preferably by the branch nearest to the place of residence of parents of the student borrower.

No prepayment penalty is to be levied for prepayment of the loan any time during the repayment period.

In case of studies abroad, banks may obtain the SSN/Unique Identification Number (UIN)/Identity Card and note the same in the bank’s records.

The UID number issued by UIDIA may also be captured in bank’s system as and when available.

SANCTIONING AUTHORITY:

Branch Managers in Scale-I    

Rs.  2.00 lacs

Branch Managers in Scale-II    

Rs.  4.00 lacs

Branch Managers in Scale III 

Rs.  7.50 lacs

Chief Managers                      

Rs.15.00 lacs

AGMs & above 

Rs.20.00 lacs