Kerala HC – The New Indian Express

By Express press service

KOCHI: The Kerala High Court has observed that banks denying education loans to students on the grounds of parents’ low credit rating defeats the very purpose of such facilities. Nationalized banks and scheduled banks would not be justified in framing conditions such as the CIBIL score of co-borrowers or parents to sanction priority sector loans, the court said. Two students, Kiran David and Gayathry VS, have gone to court against the rejection of student loan applications by the State Bank of India (SBI).

Look at projected future student earnings: HC

Opposing the plea, the bank argued that SBI’s educational loan policy provided that the loan would be jointly sanctioned on behalf of the student and their parents. The parent would be a co-borrower in the loan. The bank must ensure that the co-borrower has the necessary credit discipline.

Justice N Nagaresh, citing a Supreme Court verdict, said: “The possibilities of reimbursement should be decided not on the financial status of the parents, but only on the projected future income of students in employment after their studies. .

The court ordered the bank to reconsider the loan applications regardless of the co-borrowers’ low credit ratings and to sanction and disburse the eligible loan amount, if the applicants are otherwise eligible, within one month. month. The court stated that when banks grant loans as priority sector loans, the eligibility criteria set for the sanctioning of such loans must necessarily relate to the purpose sought.

In order to enable poor and middle class students to pursue higher education of their choice without any fund constraint, a scheme has been put in place by the Union Government to ensure that no student misses the higher education due to lack of funds. India to ensure that no student misses higher education for lack of funds.

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