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Banks can’t deny educational loans to students citing parents’ liabilities: HC

Thiruvananthapuram: The Kerala high court on Thursday said that banks cannot deny educational loans to students citing liabilities of their parents and directed a national bank to disburse the loan applied by a meritorious student
PUBLISHED ON JUL 17, 2021 01:29 AM IST

Thiruvananthapuram:

The Kerala high court on Thursday said that banks cannot deny educational loans to students citing liabilities of their parents and directed a national bank to disburse the loan applied by a meritorious student.

While giving a direction to the Indian Bank in this regard, the single bench of Justice PB Suresh Kumar observed that the very purpose of the educational loan is to ensure that a meritorious student cannot be deprived of an opportunity to higher education on the ground that he/she does not have enough resources for the same.

The petitioner, a second-year student of Bachelor of Ayuveda 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 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. However, theIndian Bank denied her loan, saying it was not satisfied with the economic background of her parents. Doing a small-time business, her father’s shop was closed due to the Covid-19 pandemic restrictions and he was not earning enough, the bank reportedly told her as she mentioned it in her plea.

The court said such attitude will defeat the very purpose of the educational loan scheme. “The object of all educational loans formulated by banks in accordance with RBI (Reserve Bank of India) 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,” the court observed.

If the contentions of the bank are accepted, it would defeat the object and purpose of the scheme, the cout said while directing the bank to disburse loan to the meritorious student.

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