IIM-Ahmedabad, for instance, has almost trebled its fees to Rs 4 lakh to Rs 11.5 lakh. IIM-Kolkata has hiked it from Rs 5 lakh to Rs 7.5 lakh. Others like IIM Bangalore and IIM Lucknow have hiked it from Rs 5 lakh to Rs 8 lakh and Rs 4 lakh to Rs 5 lakh respectively.

Add to that another Rs 3-4 lakh for laptops, books and others expenses, and the effective expense rises by another 30 per cent .Students, therefore, need to shell out anywhere between Rs 9-15 lakh for a two-year course.

Students, therefore, need to shell out anywhere between Rs 9-15 lakh for a two-year course and would start with a loan that they need to pay-off to free their collateral, which was not the case earlier.

Though banks would be quite willing to provide loans to students studying in these institutes, the requirement for securities will increase. Till now, the maximum loan offered for studies in India was  Rs 10 lakh.

There is no paperwork required for the initial Rs 4 lakh. After that, there needs be a guarantor for a loan up to Rs 7.5 lakh. Above this, some collateral is required.

According to RBI guidelines, for loans up to Rs 4 lakh, the interest rate should not exceed the prime lending rate (PLR). Above Rs 4 lakh, the interest rate charged is PLR plus 1 per cent.

For instance, Indian Bank [Get Quote] offers education loan schemes up to Rs 10 lakh for graduate, postgraduate and professional education in India. The current rate of interest is 12.50 per cent for loans up to Rs 4 lakh and 13 per cent for an amount above that.

Amit Roy (name changed), who recently passed out of IIM Lucknow, took an education loan of Rs 7.2 lakh. Today, he is paying Rs 14,000 a month as equated monthly instalments (EMIs), which is around 20 per cent of his take-home salary. And he will continue to do so for the next 7 years. "Most of my colleagues are paying instalments now," he admits.

Therefore, even the cr�me-de-la-cr�me of students would start their careers with a loan in their balance sheets. Imagine getting the first salary cheque with an equated monthly instalment (EMI) deduction. Not that this is a new phenomenon. IIM students have had to resort to educational loans for a while now.

Rajeev Mishra (name changed), who has completed a year in IIM-Kolkata, took a loan of Rs 7.5 lakh from the State Bank of India [Get Quote] last year. Similarly, there are many others who have taken loans. All of them believe their salaries will more than make up for the amount borrowed.

Banks over the years have been gearing up to meet the demands of aspiring IIM and IIT students because the repayment ability is there.

Banks over the years have been gearing up to meet the demands of aspiring IIM and IIT students because the repayment ability is there.

D Krishnamurthy, general manager, Bank of India, said: "With the hike in the IIM fees, we are looking at providing the students with bigger loans by raising the limit."