KOCHI: The Kerala High Court has come to the rescue of a student, who was denied an educational loan by a bank and observed that the liability, if any, of the parents shall not be an impediment for the bank in considering an application for an educational loan. The court also directed the bank to disburse the loan applied for by the student forthwith
Justice PB Suresh Kumar issued the order on the petition filed by Devik Soniraj, a second-year BAMS student challenging the decision of Bank of India, a public sector bank, in declining her request for an educational loan. She had paid the fee payable for the first year of the course and a portion of the fee payable for the second year.
As her family was unable to raise the entire balance fee for the course and they are withuot any collateral security to be offered for availing an educational loan for the entire balance fee, she along with her father applied to the bank for an educational loan of Rs.7,50,000 for which no security is insisted by the bank in terms of its Educational Loan Scheme.
However, the bank denied her application citing that she had not made available satisfactory evidence to show that she will be in a position to pay the deficit fee. The bank added that the stand of the student that the deficit fee would be met by her father from his business income cannot be accepted, as he is not generating any income from his business.
The court pointed out that the educational loan schemes formulated by banks are to ensure that a meritorious student shall not be deprived of an opportunity to pursue higher education merely on the ground that he/she does not have resources for the same.
The revised guidance notes on Model Education Loan Scheme by the Indian Banks' Association in 2015 clarify that repayment possibilities of educational loans under the scheme are not to be assessed based on the financial position of the parents but on the projected future earnings of the students on employment after education.
The court observed that the stand of the bank that the family of the petitioner may not be in a position to pay the deficit fee payable by the petitioner for the course and therefore she is not entitled to the loan applied for, is unsustainable in law. The very purpose of the Educational Loan Scheme formulated by the bank 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 does not have resources for the same. If the contentions raised by the bank are accepted, the same would defeat the object and purpose of the scheme, observed the court.