education loans

http://in.news.yahoo.com/nitish-loan-jab-banks-220840264.htm

A nationalised bank is supposed to give an educational loan of upto 4 lakhs without collateral/ guarantor. Last year I had nerve-racking experience with one such bank-- partly due to my own illiteracy, and partly due to the total lack of commitment of the bank staff.

My daughter needed a Rs 4 lakh educational loan. The reason the loan was required was that the UK visa rules state that the student/parent must show a 3 month bank balance in excess of the money required to pay a year's tuition + 9 months' living expense. The loan sanction was required to add up to the amount.

First the bank manager kept dodging me...come in the evening...come tomorrow etc. Then, she asked me to show all my fixed deposits which added upto more than my loan amount.

(What about the 'no collateral' rule?). The to-ing and fro-ing went on for about a week.

Then VERY grudgingly, she sanctioned the loan keeping me and my offspring on the edge for days.

After sanctioning the loan, she had to give a letter stating the fact. She worded it poorly, and I did not realise that. Secondly, she had given my account balance statement on an ordinary piece of paper, not on the bank's stationary, the import of which I did not realise. This resulted in the visa being rejected due to lack of proof of sufficient finance.

Then a harrowing scramble to get the balance statements on bank stationary for which she gave us a hard time and then gave it grudgingly, after charging me Rs 40 for one printout page; a revised statement that the loan had been sanctioned required me to pull strings-- something I hate doing. Finally the visa was given one day before the term started. A phoned request to the school at UK got us the extra time (so different from our own officialdom). Then I went to the bank again and asked if all formalities were done, and did my daughter need to sign anything else...etc. The manager said everything was done and I could avail of the loan anytime I needed it. Since I did not want to start paying EMI till I needed to, I asked if it was OK to take the actual loan amount after three months. She said it was fine.

Three months later, a new bank manager came in. He said the loan amount cannot be released to anyone except the student. The student must come to India, sign papers and accept the money. Or go to the embassy sign an affidavit that her mother can accept the loan.

That's when I finally gave up!

It was not a problem, since my daughter did not really need that loan, we just needed it to add up to the required balance at the time of application. But what if she had? she would have had to take a week off, spend 1 lakh, come and sign papers.

If any Indian student, aspiring to study in the UK is reading this blog, please note-- all financial statements must be on paper with bank logo, signed and stamped. . Nowadays, banks give statements on plain paper, signed and stamped, but it will not do (all banks gave me my account statements on plain paper). If an education loan is availed of, the UK govt expects that the bank state that it is sanctioning an unconditional loan-- this many bank managers are not willing to do. One has to come to some understanding and ask the bank to go as far as it can. The UK visas are given on points basis and it is all 'yes or no'. So there is no room for any explanation.

Further, regarding the loan-

The loan amount sanctioned, or a part thereof must be drawn by the student while he/she is still in India. The count down for the EMI starts the day the money is put in your account. You cannot think that since there is enough money to get through the first few months in the foreign country, one can take the money later and start paying the EMI later. That logic doesn't work.

The sad part is, though I have a PhD, I was almost an illiterate in this matter, and so was my daughter. I did not check for the bank logo, and assumed that a signed & stamped statement is good enough. Nor did I go through the visa consultants, since there was no time to find a reliable one.

However, the bank managers must be aware of all this and could have taken a little care while furnishing me the documents. 'Customer care' is just a department those two words don't mean anything to them.