Justice PV Kunhikrishnan, in his order, ordered the bank to pay Rs 4,07,200 to the petitioner’s college immediately (File Photo/PTI)
The Kerala High Court has left the matter open and asked the bank to feel free to file a counter affidavit and may also ask for an early hearing of the matter.
In a move towards easier delivery of education loans to students, the Kerala High Court has ruled that students’ education loan applications cannot be rejected on the basis of a low CIBIL (Credit Information Bureau (India) Limited) score. Is. Justice PV Kunhikrishnan, in his order, ordered banks to adopt a ‘humanitarian approach’ while reviewing a student’s education loan application.
Justice PV Kunhikrishnan emphasized that students are the nation builders of tomorrow and they have the responsibility to lead the country in future. As reported by LiveLaw, the Kerala High Court remarked, “Just because, a student who is an applicant for education loan has a low CIBIL score, I believe, the education loan application Should not have been rejected by the bank.”
The case has been filed by a student who had taken two education loans, one of which is overdue by Rs 16,667 and the other has been written off by the bank. Due to earlier education loan issues, the petitioner had a low CIBIL score. The petitioner’s lawyers argued that unless the amount is received immediately, the petitioner would be in trouble. The lawyers relied on the student’s plea in the 2020 case Pranav SR Vs Branch Manager & Ors. The counsel for the petitioner submitted that the customer has got a job offer from a multinational company and thus would be able to repay the entire loan amount.
In a 2020 case, the court said that an unsatisfactory credit score of a student’s parent cannot be a ground for rejecting an education loan application. The court said that the repayment capacity of a student after getting a job should be the deciding factor as per the scheme. On the other hand, the respondents argued that the observation of the court is against the scheme as directed by the Reserve Bank of India by the Indian Banks’ Association.
Respondent further contended that the Credit Information Companies Act, 2005, the Credit Information Companies Rules, 2006 and circulars issued by the State Bank of India restrict disbursement of education loan in situations similar to that of the petitioner. Justice PV Kunhikrishnan, in his order, directed the bank to immediately pay Rs 4,07,200/- to the petitioner’s college.
The Kerala High Court has left the matter open and asked the financial institution to feel free to file a counter affidavit and may also ask for an early hearing of the issue.