Narotam Sekhsaria Loan Scholarships
Saturday, February 14th, 2009
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We recently found this loan scholarship program. It sounds somewhat interesting at the same time raises some red flags.
According to the foundation website, “The objective of the Scholarship Program is to evolve a group of young professionals and leaders of higher caliber imbued with values of entrepreneurship and ethics. This program therefore goes beyond financial support and has a unique aspect - a mentoring program to nurture and motivate scholars.”
The deadline is February 20th 2009. It is open for Indian nationals below the age of 30. The Foundation awards interest free loan scholarships to Indian students with a consistently good academic record. The amount of scholarship, up to a maximum of Rs. Ten Lacs. (Indian Rupees 1 million, approx USD 20k).
Who is Narotam, Sekhsaria? Apparently the promoter of Gujrat Ambuja Cements, and one of the richest Indians. That should make is foundation/loan scholarship somewhat credible. However we are highly concerned that there is a application fee of Rs. 300. As a rule of thumb, any scholarship worldwide where the applicant is required to pay a fee should be scrutinized carefully before applying for it. But this is a loan - so you may treat it as a loan processing fee.
We did some simple calculations to put the Rs. 300 application fee in perspective. Loan is payable in 4 years. Assuming an interest rate of 10%, for a loan of Rs. 1 million, the total interest amount would be approx. Rs. 217,400. State Bank of India charges simple interest on a daily reducing basis, so the actual interest for this amount may be less. Now let us divide this amount by Rs. 300 and round up, and we get 725. This means that if the scheme attracts more than 725 applicants per loan scholarship, then this is a profitable proposition, else charitable proposition. [Assuming every scholarship-loan is for the maximum amount]
Another problem is that the “Scholars will have to take an insurance policy and assign it to the Foundation.” The insurance policy may be of an amount far exceeding the loan amount. We have not seen a case where you buy a home or car on loan and you are expected to sign off your life insurance to the creditor. In the sad event of the death of the person who took the loan, it is a loss to the creditor and that is how normally things work. The insurance amount still goes to immediate family members/next of kin.
However, due to a reputable name behind this scholarship, and its office at Nariman Point, Mumbai, we hope that it is a good option for those seeking an interest free loan. May be there is some good reason behind the application fee. One should make sure that the insurance amount over and above the outstanding loan amount should still be paid to the family, not to this foundation.
Reference: website of Narotam Sekhsaria Foundation
