Kamala Nehru College, University Of Delhi

Skill Enhancement Course

FINANCE FOR EVERYONE

Continuous Assessment Project

Semester 5

Comparative Analysis of Educational Loans

(Bank of Baroda and Axis Bank)

Name: ISHIKA GARG

Roll No: SOC/23/22

Department: Sociology
Introduction

Higher education today can cost anywhere between ₹15 lakhs to 2 cr, including tuition,
accommodation, and living expenses and other expenses. Most families cannot afford to pay this
amount upfront. Educational loans help students afford quality education by spreading the cost
over time. Repayment starts once the student begins earning, ensuring that financial constraints
do not limit their educational opportunities.

Profile of Banks

1.​ Axis Bank (Private Sector)

Axis Bank is one of India’s leading private sector banks, ranking third in size among its peers. It
began operations in 1994 as UTI Bank and rebranded as Axis Bank in 2007. The bank has a
strong presence across India with over 5,100 branches and 15,000 ATMs. Additionally, it has
established an international footprint with branches in Dubai, Hong Kong, Shanghai, and
Singapore. Axis Bank caters to a wide range of customers, including corporate clients, MSMEs,
agriculture, and retail sectors.

2.​ Bank of Baroda (Public Sector)

Bank of Baroda is one of India’s oldest and largest public sector banks, founded in 1908 and
nationalised in 1969. In 2019, it underwent a significant merger with Dena Bank and Vijaya
Bank, further expanding its reach. With over 8,400 branches and an extensive network of ATMs
across the country, Bank of Baroda provides a wide range of financial services. Its headquarters
is located in Vadodara, Gujarat, and it has a strong reputation for serving both urban and rural
customers.

Eligibility Criteria

Student Eligibility

●​ Indian citizen/resident
●​ Minimum 50% marks in HSC or graduation
 ●​ Secured admission through entrance test or merit-based selection.
●​ Admission to recognized professional/technical or career-focused institutions.
●​ Co-applicant (parent/guardian) must show regular income.
●​ For Executive Development Programmes: student must be employed during study.

Courses Eligible

●​ Graduate & postgraduate professional/technical courses (MBA, MCA, MS, etc.).

●​ Specialized courses like CIMA (London), CPA (USA), aeronautical, pilot training,
shipping, etc., approved by competent authorities.
●​ Executive/Certificate Programmes (online/part-time/distance) offered by top global
institutions.

Loan Amount & Coverage

Bank Minimum Loan Maximum Loan Coverage Includes

Axis Bank ₹50,000 ₹2 crore Tuition, hostel, library/lab fees,

books, laptops, refundable
deposits, study tours, insurance,
travel expenses.

Bank of Baroda ₹25,000 ₹1.5 crore Tuition and exam fees,

(premium) / (premium) / ₹60 hostel/mess charges, laptops,
₹10,000 lakh study tours, thesis, insurance,
(non-premium) (non-premium) travel expenses.
Interest Rates

1.​ Axis Bank:

It generally offers floating interest rates linked to its Marginal Cost of Funds based Lending
Rate (MCLR), with rates ranging approximately between 8% and 16%. Current rate is around
9%. Concessions are available for students admitted to institutions with which the bank has
tie-ups.

2.​ Bank of Baroda:

It provides both floating and fixed interest rates depending on the institution, loan amount, and
category of the student. Special rates are also available for children of defense personnel under
the Baroda Yodha Education Loan Scheme.

Floating Rates

Product Conditions Loan Amount Repo Rate + Effective Rate

Spread of Interest

Baroda Scholar Education loan All BRLLR + 0.55% 8.70%

– Premier to Premier
Institutions Institutions
Abroad (specified in list)

Baroda Scholar Education loan All BRLLR + 0.55% 8.70%

– Premier to Premier
Institutions Institutions in
Abroad Canada
(Canada)
Non-Premier Education loan Up to ₹7.50 lakh BRLLR + 2.00% 10.15%
Institutions to Non-Premier
Abroad Institutions

Non-Premier Education loan Above ₹7.50 BRLLR + 1.05% 9.20%

Institutions to Non-Premier lakh
Abroad Institutions

Baroda Yodha Special rate for All BRLLR + 1.05% 9.20%

Scheme – children of
Non-Premier defense
Institutions personnel

Non-Premier Education loan Up to ₹7.50 lakh BRLLR + 2.00% 10.15%

Institutions to Non-Premier
Abroad Institutions in
(Canada) Canada

Non-Premier Education loan Above ₹7.50 BRLLR + 2.55% 10.70%

Institutions to Non-Premier lakh
Abroad Institutions in
(Canada) Canada

Fixed Rates
Product Conditions Loan Amount Repo/Base Rate Effective Rate
+ Spread of Interest

Baroda Scholar – Education loan Up to ₹7.50 lakh Base Rate + 11.45%

Premier to Premier 2.00%
Institutions Institutions
Abroad (specified in list)

Baroda Scholar – Education loan Above ₹7.50 BRLLR + 2.55% 10.70%

Premier to Premier lakh
Institutions Institutions
Abroad (specified in list)

Baroda Yodha Children of Up to ₹7.50 lakh Base Rate + 11.45%

Scheme – defense 2.00%
Premier personnel
Institutions

Baroda Yodha Children of Above ₹7.50 BRLLR + 2.55% 10.70%

Scheme – defense lakh
Premier personnel
Institutions

Baroda Scholar – Education loan Up to ₹7.50 lakh Base Rate + 11.45%

Premier to Premier 2.00%
Institutions Institutions in
(Canada) Canada

Baroda Scholar – Education loan Above ₹7.50 BRLLR + 2.55% 10.70%

Premier to Premier lakh
Institutions Institutions in
(Canada) Canada

Non-Premier Education loan Up to ₹7.50 lakh Base Rate + 11.45%

Institutions to Non-Premier 2.00%
Abroad Institutions

Non-Premier Education loan Above ₹7.50 BRLLR + 3.05% 11.20%

Institutions to Non-Premier lakh
Abroad Institutions

Baroda Yodha Children of Up to ₹7.50 lakh Base Rate + 11.45%

Scheme – defense 2.00%
Non-Premier personnel
Institutions

Baroda Yodha Children of Above ₹7.50 BRLLR + 3.05% 11.20%

Scheme – defense lakh
Non-Premier personnel
Institutions
 Non-Premier Education loan Up to ₹7.50 lakh Base Rate + 11.45%
Institutions to Non-Premier 2.00%
Abroad (Canada) Institutions in
Canada

Non-Premier Education loan Above ₹7.50 BRLLR + 4.55% 12.70%

Institutions to Non-Premier lakh
Abroad (Canada) Institutions in
Canada

Concessions: A 0.20% interest rate concession is provided for girl students in Non-Premier
Institutes; however, no concession is offered for Premier Institutes.

Repayment Terms

●​ Loan Tenure: 10–15 years after moratorium.

●​ Moratorium Period: Course duration + 1 year.
●​ Instalments:
○​ Up to ₹7.5 lakh – max 120 EMIs.
○​ Above ₹7.5 lakh – max 180 EMIs.
●​ Interest during moratorium: Simple interest charged monthly
●​ Penalty: 2% per annum on overdue amounts above ₹4 lakh.

Collateral / Security Requirements

Loan Amount Security Requirement

 Up to ₹4 lakh Co-obligation of parent; no collateral.

₹4–7.5 lakh Third-party guarantee + future income assignment.

₹7.5–80 lakh Tangible collateral equal to 100% of loan + future

income assignment.

Above ₹80 lakh Collateral coverage of 1.25× loan amount.

Conditions for Guarantor:​

The guarantor must be an immediate family member, such as a parent or sibling. They should be
an Indian citizen with a CIBIL score of 600 or above and must have a stable, verifiable source of
income to ensure repayment security.

Processing & Other Charges

Bank Processing Fee Other Charges

Axis Bank Up to 2% + GST Nil margin for premier institutes up to ₹4

lakh; 10–15% margin for others.

Bank of Baroda Nil up to ₹7.5 lakh; above ₹8,500 for advocate/valuer (if property
₹7.5 lakh – 1% (max ₹10,000) mortgaged); no mortgage creation fee.
+ GST
Government Schemes / Subsidies

1.​ Axis Bank: West Bengal Student Credit Card Subsidy Scheme
●​ Eligibility: Students from West Bengal pursuing higher studies in India or abroad.
●​ Loan Amount: Up to ₹10 lakh without any collateral security.
●​ Coverage: Loan disbursed within the norms of the scheme for eligible courses.

* The other government subsidies offered by these banks do not cover the international education
programme.

Comparative Analysis Table

CRITERIA AXIS BANK BANK OF BARODA

Bank Type Private Sector Public Sector

Loan Range ₹0.5 lakh – ₹2 crore ₹0.25 lakh – ₹1.5 crore

Interest Rate ~9% (8–16%) 8.70–10.70%

Repayment Tenure 10–15 years 10–15 years

Moratorium Course + 1 year Course + 1 year

Collateral Required above ₹7.5 lakh Required above ₹7.5 lakh

 Processing Fees Up to 2% + GST Nil up to ₹7.5 lakh; 1%
thereafter

Subsidy Schemes CSIS, WB Student Credit Card CSIS

Concession for Girls Institutional-based 0.20% for Non-Premier

Institutes

Coverage Broad coverage including travel, Similar coverage + refundable

laptop, insurance deposits

Guarantor Requirement Family member with income & Family member guarantor
CIBIL ≥600

Case Study Analysis

Profile 1: Student at Premier Institute with 1 CR loan

Riya Sharma, a 24-year-old student from Mumbai, has secured admission to the INSEAD
Business School in France for her MBA program.

The total estimated cost of her two-year course (including tuition, accommodation, and living
expenses) is around ₹1 crore. To finance her studies, Riya approached the Bank of Baroda, a
reputed public sector bank.

Riya chose Bank of Baroda because:

 ●​ It offers a competitive interest rate of 8.70% under the Baroda Scholar Scheme for
students studying in premier institutes abroad.
●​ The bank also provides a longer repayment period of up to 15 years, allowing her
flexibility in managing her post-graduation finances.
●​ The loan includes coverage for tuition fees, hostel accommodation, travel expenses, study
tours, and insurance.

Loan Details

●​ Interest Rate: 8.70% (as per Baroda Scholar Scheme for Premier Institutions Abroad)
●​ Tenure: 15 years
●​ Moratorium Period: Course duration (2 years) + 1 year = 3 years total
●​ EMI Starts: After 3 years (simple interest payable during study period)
●​ Repayment: 180 EMIs post-moratorium
●​ Collateral: Tangible collateral covering 1.25× loan amount (₹1.25 crore) + future income
assignment
●​ Guarantor: Riya’s father, Indian citizen with CIBIL score of 750
●​ Processing Fee: 1% of loan amount (₹1 lakh) + GST
●​ Expenses Covered:
○​ Tuition, living expenses, accommodation, books, laptops, travel, and insurance
○​ Study tour and thesis-related costs

Riya’s total interest cost over 15 years is estimated at ₹81 lakh (approx), bringing total
repayment to around ₹1.81 crore.

Profile 2: Student at Non-Premier Institute with 50 lakh loan

Arjun Mehta, a 23-year-old engineering graduate from Delhi, received admission to Nanjing
University, China for a master’s program in Computer Science.

The total cost of his education (including tuition and living expenses) is estimated at ₹50 lakh.
To fund his studies, Arjun decided to apply for an education loan from Axis Bank, one of India’s
leading private sector banks.
Arjun chose Axis Bank because:

●​ It offers higher loan amounts up to ₹2 crore

●​ It offers competitive floating interest rates starting at around 9.5% pa
●​ Fast digital application process
●​ Axis Bank also provides quicker loan approvals and personalised services, which suited
Arjun’s need for timely disbursement before his university deadline.
●​ The loan covers his tuition, hostel accommodation, books, laptop, and travel costs.

Loan Details

●​ Interest Rate: ~9.5% (floating MCLR-based rate)

●​ Tenure: 10 years
●​ Moratorium Period: Course duration (2 years) + 1 year = 3 years total
●​ EMI Starts: After 3 years
●​ Repayment: 120 EMIs post-moratorium
●​ Collateral: Tangible security equal to 100% of loan amount (₹50 lakh) + co-applicant
income assignment
●​ Guarantor: Arjun’s mother, salaried employee, CIBIL score 720
●​ Processing Fee: 2% of loan amount (₹1 lakh) + GST
●​ Expenses Covered:
○​ Tuition, hostel, books, laptops, travel, insurance, and refundable deposits

Arjun’s total repayment after 10 years is approximately ₹77.8 lakh, including interest.
Criteria Case 1: Premier Institute Case 2: Non-Premier Institute
(Riya) (Arjun)

Bank Bank of Baroda Axis Bank

Loan Amount ₹1 crore ₹50 lakh

Institute Type Premier Non-Premier

Interest Rate 8.70% 9.50%

Tenure 15 years 15 years

Moratorium 3 years 3 years

Collateral 1.25× loan value 100% of loan value

Processing Fee 1% + GST 2% + GST

CSIS Scheme Not applicable Not applicable

Total Repayment ~₹1.81 crore ~₹95 lakh

Recommendations:

For Riya (Case 1), the Bank of Baroda education loan is the more suitable option. This is
because:

●​ The Baroda Scholar Scheme specifically offers lower interest rates (8.70%) for premier
institutions abroad.
●​ Being a public sector bank, Bank of Baroda provides greater stability, transparency, and
government-backed schemes for large education loans.
●​ It allows a longer repayment tenure (up to 15 years), giving Riya sufficient time to
manage her EMI post-graduation.

However, for Arjun (Case 2), since he is on a tight deadline to confirm the admission, its more
suitable that he takes loan from a private bank. This is because:

●​ Axis Bank offers flexible floating interest rates (~9.5%) and a faster digital processing
system, which is helpful for students needing timely disbursement.
●​ It provides loan amounts up to ₹2 crore, ensuring Arjun’s ₹50 lakh requirement is
comfortably met.
●​ Being a private bank, Axis offers personalized service, quick approval, and minimal
bureaucratic delay, which are crucial for students managing tight admission timelines.
●​ The collateral requirement and repayment structure are straightforward, with options for
early prepayment without penalties.

Summary of Interaction with the Bank Staff

When I visited the banks for the enquiry, the experience at both places had a stark difference.
The staff interaction at Bank of Baroda was quite unpleasant. The staff wasn’t willing to
communicate or provide any information. They repeatedly said that all information is available
on the website, which I later referred to for compiling this project report. On the contrary, the
Axis Bank staff was slightly more cooperative, also given that it is a private bank. They provided
me with the general details of the loan schemes and the list of documents required to process the
loan. For the details, I again had to refer to their website, as they were also not willing to waste
time outlining every detail. The list of documents provided by them is attached in the appendix.
Overall, the experiences were not great in general.

Student Reflection

If I had to take an educational loan today, I would personally choose Bank of Baroda as my first
preference. Being a public sector bank, I would lean towards it because of its reliability,
transparency and borrower-friendly policies. Moreover, it offers discount to female students on
certain categories of education loans which is a bonus. Since an education loan is a long-term
financial commitment, I would prioritize affordability, security, and long-term stability.

The main reasons for choosing Bank of Baroda are as follows:

●​ It offers comparatively lower rates, starting around 8.70% under the Baroda Scholar
Scheme, especially for students enrolled in premier institutions.
●​ The repayment period of up to 15 years allows graduates sufficient time to settle into
their careers before beginning full loan repayment.
●​ The loan covers tuition fees, accommodation, travel, insurance, and study-related costs,
ensuring that students can focus on their education without financial stress.
●​ As a public sector institution, Bank of Baroda offers a sense of security and minimizes
the risk of hidden charges or policy fluctuations.

However, in a situation like Arjun’s, where time is limited and there is an urgent need for quick
loan approval before admission deadlines, I would choose Axis Bank. Being a private sector
bank, Axis offers faster loan processing, less paperwork, and convenient online application
systems, which can help avoid unnecessary delays. It also has a higher loan limit of up to ₹2
crore and provides flexible interest options, making it suitable for students applying to
international universities with tight payment schedules.

Ultimately, I believe that my choice of bank, similar to anyone else’s choice, should be based on
careful assessment of all criteria and full knowledge of all the different schemes offered by these
banks. One should carefully analyse all the data before making a decision, since an education
loan is a long-term commitment. Moreover, the choice of bank is also dependent on one’s
individual circumstances as well, which may make any bank more suitable than the other.

Conclusion and Suggestions

Key Findings:

●​ Student loans are crucial for facilitating access to advanced education, particularly for
those undertaking expensive professional or international courses.
●​ Bank of Baroda provides reduced interest rates (beginning at approximately 8.70%) and
extended repayment terms, making it ideal for students at top institutions.
●​ Axis Bank offers quicker processing, larger loan amounts (up to ₹2 crore), and digital
ease, which assist students at non-elite or mid-tier international universities.
●​ Both banks encompass various costs such as tuition, housing, travel, textbooks, and
insurance, providing thorough financial assistance.
●​ The repayment period for both banks spans 10 to 15 years, including a moratorium period
of the course duration plus one additional year.
●​ For loans over ₹7.5 lakh, collateral and guarantor stipulations are compulsory, with more
stringent conditions for larger loan amounts.
●​ In general, Bank of Baroda excels in affordability and reliability, whereas Axis Bank
stands out for speed and flexibility, enabling students to select according to their
individual requirements and schedules.

Suggestions:

If a student intends to apply for an Education loan, they should be thoroughly informed about the
various loan programs offered by different banks. Additionally, under positive conditions, loan
applications need to be organized and submitted with sufficient time available, ensuring we
secure the most advantageous interest rates achievable. Additionally, for students pursuing
education in India, various government schemes offer reductions in interest rates on education
loans, which should be investigated promptly.
Appendix

1.​ Proof of field visit

 2.​ References

Axis Bank education loan:

[Link]

Bank of Baroda education loan:

[Link]
[Link]
edp-being-offered-by-premier-institutions-abroad

Government schemes for education abroad:

[Link] [Link]
[Link]
[Link]
[Link]

3.​ Additional Elements

List of Documents for loan processing as provided by Axis Bank

Student

1- 1passport size photo

2-Adhar card/passport

3-pan card

4-college offer letter with fee structure

5- 10th 12th and higher qualifications marksheet

6- score card

7- Gap proof (if any gap)

(If self-employed)

Co-applicant mother and father both

1- 1passport size photo

2-Aadhar card/Passport

3-Pan card

4-7 months latest savings account data

5-7 months latest current banking

6- 3-year ITR with computation of income

7- GST registration