Can't reject education loan over arrears: High Court

Published: 09th July 2013 08:05 AM  |   Last Updated: 09th July 2013 08:05 AM   |  A+A-

Holding that banks cannot deny educational loans on the grounds that a student has examination arrears, the Madras High Court (Madurai Bench) has directed a Canara Bank branch in Karaikudi in Sivaganga district to sanction Rs 3.60 lakh as loan to an engineering college student.

The student V P Infant Ranjith is pursuing BE Computer Science Engineering in a private engineering college near Chennai. His father V K Peter Rajan, an advocate, filed a petition stating that the Canara Bank, Sankarapuram Branch in Sivaganga had refused to sanction an education loan during 2011 stating that they had already reached the cumulative loan sanctioning limit for the year. The bank officials advised him to approach the next year.

The following year when he applied for a loan of Rs 3.60 lakh, the bank kept his application pending but orally indicated to him that since he is an advocate it would be difficult to recover the loan amount. Besides, Ranjith had failed in a subject in the second year and hence loan cannot be granted to him.

Refusing to accept the bank’s contention, Justice N Kirubakaran said in engineering education the compartmental system was followed (allowing students to clear arrears in subsequent semesters). “It is not fair on the part of the bank to reject the application on the ground that the student failed in one subject,” he said.

Justice Kirubakaran said, “The bank is granting educational loan subject to rules and regulations and if there is failure on repayment of loan, it is always open to the bank to take recovery action.”

Hence, he directed the bank to process the education loan within 10 days.


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