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‘Banks can’t deny educational loans to student citing parents’ liabilities’: Kerala HC
The court observed that the very purpose of an educational loan is to ensure that a meritorious student can’t be deprived of an opportunity to higher education,
The Kerala High Court on Thursday ruled that banks can’t deny educational loans to students citing liabilities of their parents and directed a national bank (Indian Bank) to disburse the loan applied by a meritorious student.
While giving direction to the bank, the court observed that the very purpose of an educational loan is to ensure that a meritorious student can’t be deprived of an opportunity to higher education on the ground that he/she doesn’t have enough resources for the same.
The petitioner, a second-year student of Bachelor of Ayurveda Medicine and Surgery, approached the court after her loan request was turned down by the bank. In her petition, she contended that she secured admission through the centralised seat allotment process of the state in 2019 on the basis of her rank in the National Eligibility-cum-Entrance Test.
She said since her family could not raise the full amount of the course she and her father approached the banks for an educational loan of ₹7,50,000 for which no collateral security is needed as per the educational loan scheme. But the bank denied her loan saying that it was not satisfied with the economic background of her parents and the amount can’t be disbursed. Doing a small-time business, her father’s shop was closed due to the pandemic restrictions and he was not earning enough income due to this, the bank reportedly told her, she mentioned it in her plea.
The court said such an attitude will defeat the very purpose of the educational loan scheme. “The object of all educational loans formulated by banks in accordance with RBI guidelines is to ensure that a meritorious student shall not be deprived of the opportunity to pursue higher education merely on the ground that he/she doesn’t have sources for the same,” it observed.
If the contentions of the bank are accepted it would defeat the object and purpose of the scheme, the single bench of Justice PB Suresh Kumar observed. Later, the court held that its contentions were not acceptable and directed the bank to disburse the loan to the meritorious student.
