Give education loan, don’t look at credit rating of parents: Kerala HC

The Kerala High Court asked banks to go soft on students seeking loan while the apex court was lenient towards a set of NBFCs

Published: 11th May 2022 06:35 AM  |   Last Updated: 11th May 2022 06:35 AM   |  A+A-

Kerala High Court (Photo| A Sanesh/EPS)

Kerala High Court (Photo| A Sanesh/EPS)

By Express News Service

KOCHI:  The Kerala High Court has observed that banks denying educational loans to students citing low credit rating of parents defeated the very purpose of such facilities. Nationalised banks and scheduled banks would not be justified in framing conditions such as the CIBIL score of co-borrowers or parents for sanctioning priority sector loans, the court said. Two students, Kiran David and Gayathry V S, approached the court against the rejection of applications for educational loan by the State Bank of India (SBI).

Look at projected future earnings of students: HC

Opposing the plea, the bank submitted that SBI’s educational loan policy was that the loan would be sanctioned jointly in the name of the student and their parents. The parent would be a co-borrower in the loan. The bank has to ensure that the co-borrower has the necessary credit discipline.

Justice N Nagaresh, citing a Supreme Court verdict, said, “The repayment possibilities are to be decided not on the financial position of the parents but solely on the projected future earnings of the students on employment after education.”

The court directed the bank to reconsider the loan applications disregarding the low credit score of the co-borrowers and sanction and disburse eligible loan amount, if the petitioners are otherwise eligible, within a month. The court said when the banks disburse loans as priority sector loans, the eligibility criteria fixed for sanction of such loans should necessarily have a nexus with the object sought to be achieved. 

With a view to enabling poor and middle-class students to pursue higher education of their choice without any constraint of funds, a scheme was provided by the Union government to ensure that no student misses out on higher education for lack of funds. India to ensure that no student misses out on higher education for lack of funds.

India Matters


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp