IIM-Trichy to open on June 15, 2011

The hallowed portals of an Indian Institute of Management (IIM) will be more accessible to aspiring business students of Tiruchirapalli city when (IIM-T) opens on June 15 this year. All infrastructure is in place, 12 faculty members have been chosen after stringent selection parameters and admissions had commenced, with 27 students already being chosen, Dr. Prafulla Agnihotri, Director of IIM-T said.

The institute, to be inaugurated on June 15, would have a total of 60 students in the first batch, both boys and girls. Agnihotri said the faculty would be in the institute for start of the first batch of its PostGraduate programme on Finance and Accounting, Marketing, Strategic Management, Operation and Qualitative Analysis, HR and Organisational Behaviour, Management Information System. Though the board had sanctioned recruitment of 20 members, Agnihotri said he planned to have four or five more.

On the fee structure, he said it would cost Rs. 1 million for the two-year programme, which included tuition fee, course materials, basic books and case study books. “The fee is reasonable compared to other new IIMs in the country. But IIM-T will not break even in the first year. Besides the tuition fee, students may have to pay Rs. 25,000 for advance mess bill and caution deposit of Rs, 15,000,” he said. The IIM will temporarily function from the National Institute of Technology campus in Tiruchirapalli (Trichy).

Agnihotri said he was committed to make IIM-T among the top 10 B-Schools in India in five years and hoped to introduce fellowship programmes in 2012-13. He said he had roped in more than 30 leading corporates, including MNCs, who would provide eight-week summer training programme to students at the end of the first academic year.

IIM-T has also initiated successful dialogue with leading B-Schools in Europe and USA and planned to hold talks with B-Schools in Singapore and Australia for student and faculty exchange programmes, he said. The institute was also getting ready to launch orientation programme and satellite-based programme class and online programme for working executives, he said.

Source: The Economic Times, May 17, 2011

Education Loans: Good grades to pay

If you are a meritorious student, getting an education loan will be easier and you can even bargain with the bank for a lower rate of interest. The Indian Banks’ Association (IBA), after formulating a detailed model education loan scheme to provide financial support to deserving candidates, is now reviewing the current structure of education loans in the country. The association will give its report – which among other things recommends that banks be able to decide the cut-off marks for lending without any security – to the Reserve Bank of India (RBI) shortly.

Currently, banks offer education loans to students with Indian nationality in the age group of 16 to 35 years. For availing loans below Rs. 400,000, an applicant does not have to give any security and a third-party guarantor or security amount. The guarantor of the loan could be the applicant’s parent, working sibling or even spouse, if he or she is working, and in-laws or other close relatives.

Unlike home, auto or personal loans, those availing education loans do not have to do immediate repayments and can start after completing their course and securing a source of income. The moratorium period of the loan is the course period plus one year or six months after getting a job, whichever is earlier. Banks usually keep a window of five to seven years for repaying the loan and can give an extension of another two years if the borrower has a good repaying history. The interest rate varies from 12% to 16.50% for loans up to Rs. 400,000 for a period of seven years and between 12% to 17.5% for loans above Rs. 400,000 for a period of seven years.

The Indian Banks’ Association is looking at the the rate structure of the banks and is likely to suggest a longer time period to repay the loan for students who have had a brilliant academic record. Getting a loan might get tougher for those who do have a good academic record and pay a hefty amount to get admission for higher education, especially in professional courses. Analysts say with higher default rates, banks are now taking stringent measures to approve students loans and are doing proper due diligence for those loans that are taken to fund studies in capitation fee-based courses and institutions.

All banks charge a processing fee, which can vary between 0.5 % and 2.5 % of the total loan amount the student is applying for. The maximum loan amount a student an avail for studies in India is Rs. 1 million and Rs. 2 million for studying abroad. Some banks offer discounts on the interest rate for female students. One can claim income-tax deductions for repayment of an education loan for higher education of up to Rs. 40,000 per year under Section 80DD of the Income Tax Act.

Documentation for an education loan is simple: The bank or the financial institutions will require proof of identity, age and address. The student will have to furnish the admission letter of the institution and the fee structure of the particular course for each semester or annual charges.If the student is going abroad for the course for which he is seeking the loan, then he will have to give the passport details, GMAT or GRE score, total expenses for the course and all other travel documents to the bank. Ideally, the borrower should tie up the loan after getting the visa approval, which is the last hurdle for going abroad. In case of a co-applicant, the same documents plus income proof have to be given to the bank.

The government provides full interest subsidy during the period of moratorium on loans taken by students belonging to economically weaker sections from scheduled banks, where the annual parental income does not exceed Rs. 450,000 per year. The scheme is applicable for students pursuing technical and professional courses in India. After the period of moratorium is over, the interest on the outstanding loan amount is paid by the student. The interest subsidy under the scheme is available to students only once, either for the first undergraduate degree course or the postgraduate degree and diploma course, and will not be available to those who either discontinue the course midway or those who have been expelled from the institution on disciplinary or academic grounds.

Source: The Financial Express, May 17, 2011

PE firms see future in informal education

Informal education has become a favourite investment destination for private equity (PE) players owing to the huge growth opportunities that the sector offers. They are targeting pre-schools and other institutes that help enhance the learning experience, or institutes that directly lead to employment opportunities.

Owing to the largely unregulated nature, this sector offers PE firms flexibility to do business on their own terms and utilise the profits of the business for their own. Education is one of the top three investment destinations for private equity players in India.

About 95 per cent of this sector is unorganised and presents greater investment opportunities for players through acquisitions. A KPMG report on education sector said that the market size for education sector would cross Rs. 2 lakh crore (Rs. 2 trillion) by 2012; formal education (K-12 and higher education) would constitute Rs. 1.8 lakh crore (Rs. 1.8 trillion) would constitute and the informal sector (pre-schools, coaching institutes and vocational courses) would constitute about Rs. 27,000 crore (Rs. 270 billion).

Private equity firms generally exit these investments through a strategic sale to another company or an IPO. The fastest growing verticals are vocational courses and coaching institutes. In 2009, around Rs. 556 crore (Rs. 5.56 billion) was invested in companies such as Tutorvista, Career Point and FIIT-JEE, among others. Career Point, the only listed company in this space, raised around Rs. 110 crore (Rs. 1.1 billion) through an IPO in 2010. Intel Capital, a technology venture capital firm has also invested in education through Vriti Infocomm, an e-learning platform that provides various online facilities such as online tests, course and also classroom support solutions for schools, colleges and other institutes.

Most PE firms prefer an asset light business model, which entails little investments on the asset-side of the balance sheet, and investee companies usually lease instead of buying assets. “The competition situation is likely to remain sharp in the country because of which the pressure on the students is going to be very high. As most of the places are leased, we can start several courses from the same centre, providing economies of scale,” said Mr. Andrey Purushottam, Executive Director, Helix Investments. Helix Investments invested close to Rs. 50 crore (Rs. 500 million) in Mahesh Tutorials in 2007.

The advantage of such investments is that they provide low-exit barriers to PEs as the sector is unregulated and investments smaller. “Though opportunities for going the whole hog exist, we ensure that our funding philosophy reflects adequate and optimal funding in the investee,” said Mr. Harinder Sawhney, Managing Director, JM Financial Investment Managers. J M Financial Investment Managers has invested about US$ 8 million in UEI Global, which is into providing training for management and hospitality courses.

Source: Business Line, May 17, 2011

New MCI panel faces acid test in revamping med edu

The new five-member governing body of the Medical Council of India (MCI) will meet for the first time on Wednesday. The earlier board’s tenure ended on May 15. The biggest challenge for the new board, headed by noted cardiologist Dr. K.K. Talwar is to implement the Common Entrance Test (CET) for undergraduate students and the new medical curriculum. Some members of the former board fear that the move could get thwarted.

“We have submitted all the documents to the (health) ministry, including the revised undergraduate curriculum, CET, postgraduate regulations, codes on medical ethics, accreditation and the concept of Indian Medical Graduate. At least some of them should see the light of day,” an ex-member said. The member added, “A lot of work went into developing India’s new medical curriculum and syllabi. About 250 people worked on it, and we had as many as seven working groups.”

TOI was the first to report that the ministry would change all the MCI members. Last Friday, the ministry named Dr. Talwar as the new Chairman of the all-powerful board of governors. Other members include Prof. K.S. Sharma from Tata Memorial Hospital, Prof. Harbhajan Singh Rassam from Max Hospital and Dr. Rajiv Chintaman Yeravdekar from Symbiosis International University. Dr. Talwar told TOI, “I need some time to decide about our main issues.”

Sources said the ministry was upset with the Sarin-led governing board’s pace of work. It had supposedly failed to increase the number of postgraduate medical seats to the “desired level” in this academic session. “We were surprised that not a single member from the previous board was retained,” said an MCI official.

Union health minister Ghulam Nabi Azad was also upset with the earlier board for its unilateral announcement of introduction of the controversial CET. The MCI and the ministry were at odds over the notification, which was later deemed invalid. The notification had sought a single entrance test for MBBS and MD courses offered by all 271 medical colleges in the country, including those under private management. The move had put the ministry under pressure from several states. The 77-year-old MCI was dissolved after the CBI arrested former MCI president Dr. Ketan Desai on April 22, 2010, for accepting a bribe of Rs. 20 million in lieu of recognizing a Punjab medical college.

Source: The Times of India, May 17, 2011