Mumbai : Citibank, the International Finance Corporation (IFC) and NIIT together announced the signing of an agreement to start a Rs 400-crore student loan programme for high-tech education to be provided by NIIT. This offering is aimed mainly at the middle-class, comprising 60 per cent of the population who enroll for a comprehensive course in computers. Adds Citibank's director sales and distribution, PS Jayakumar: "Citibank pioneered the development of asset securitisation in India. We are delighted to use a derivation of this concept to make available loans to students more easily." The student loan programme jointly developed by Citibank, IFC and NIIT will be offered to students of information technology pursuing the i-GNIIT course at NIIT. The loan programme covers the cost of tuition, a multi-media PC and printer along with Internet connection for every student to practice at home, what they learn in class.The unique feature of the loan is that during the study period of three years, students are required to service only 60 per cent of the interest. The balance of interest and the whole principal amount are to be paid back in the following four years by which time the student will have found employment. The principle behind this lending programme that it is based on the future earning capacity of the student, making loans accessible to students from lower-income families.
Articulating the need to finance computer education, Citibank's advisory board chairman, Gurucharan Das said: "Education in India is both agony and ecstasy. Teachers don't teach, students don't learn, which is appalling. The role of private sector is to provide for higher education and we are aiming at the middle class, which comprises 60 per cent of India's student population".
The seven-year Citibank Student Loan covers 90 per cent of the fees for this advanced Web-centric education package, which has a programme fee of Rs 1.3 lakh for the entire course. The loan is offered at an interest rate of 16 per cent and the student's parent or guardian will be a co-borrower to the loan.
Said IFC south-Asia department's director, Bernard Pasquier: "This project will help widen the access to high quality education, an important factor for economic growth. IFC hopes that this programme, which is structured on a market basis without subsidies, will be replicated in India and in other countries. IFC values the support it will bring to the IT sector in India, which is powerful instrument of change in this country".
....Gets `BB+' rating from S&P Citibank will receive the interest, IFC will receive a price for bearing the credit risk and NIIT would receive the risk. Citibank director, sales and distribution, P S Jayakumar told The Financial Express that "entering the education loan segment was a natural extension of our successful retail banking business in India. He added that Citibank may look at the credit card business for this segment at a later stage."said Citibank local advisory board chairman Gurcharan Das: "This programme is basically aimed at the middle class whichlies between the top and the bottom 20 per cent of the population.''
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
