Banks Cannot Deny Student Loans Citing Parents’ Obligations: HC | Latest India News



Kerala’s high court said on Thursday that banks cannot deny educational loans to students citing their parents’ debts and ordered a national bank to disburse the loan requested by a deserving student.

While giving direction to the Bank of India in this regard, the Single Chamber of Judge PB Suresh Kumar observed that the very purpose of the study loan is to ensure that a deserving student cannot be deprived of an opportunity for higher education on the grounds that he / she does not have enough resources for the same.

The petitioner, a second-year Ayuveda medicine and surgery bachelor student, went to court after her loan application was rejected by the bank. In her petition, she claimed that she was granted admission through the centralized state seat allocation process in 2019 based on her rank in the national eligibility and entry test.

She said that as her family of course could not raise the full amount, she and her father contacted the banks for an educational loan of ₹7.50,000 for which no collateral is required under the educational loan program. However, the Bank of India refused her loan, claiming that she was not happy with her parents’ economic situation. Running a small business, his father’s shop was closed due to restrictions related to the Covid-19 pandemic and he was not earning enough, the bank reportedly told him as she mentioned it in her plea.

The court said that such an attitude would defeat the very purpose of the educational loan program. “The purpose of all educational loans formulated by banks in accordance with RBI (Reserve Bank of India) guidelines is to ensure that a deserving student is not deprived of the opportunity to pursue higher education simply on the grounds that it doesn’t have sources for the same, ”the court observed.

If the bank’s claims are accepted, it would defeat the object and purpose of the program, the cost said while ordering the bank to pay a loan to the deserving student.

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