Kochi: There’s good news for students seeking loans.
The Kerala High Court ruled that an education loan cannot be rejected due to the low credit score of the applicant student, and urged banks to adopt a humanitarian approach.
“While considering an education loan application, a humanitarian approach is necessary from the banks. Students are the nation-builders of tomorrow. They have to lead this country in future. Simply because there is a low Credit Information Bureau (India) Ltd [CIBIL] score for a student, who is an applicant for an education loan, I am of the considered opinion that an education loan application ought not to have been rejected by the bank,” the bench of Justice PV Kunhikrishnan said in the order.
The court was hearing the case of a student, whose application for an education loan of Rs 4.07 lakh was rejected by State Bank of India (SBI) citing a CIBIL score of 560.
He had earlier availed of two loans. While one loan was overdue for Rs16,667, the other loan was written off by the bank, due to which he has a low credit score.
The counsel for SBI argued that the Credit Information Companies Act and rules and circulars issued by SBI prohibit the disbursement of loans in such situations.
The student’s lawyer submitted that unless the loan amount is disbursed immediately, the student will be in trouble financially. He further stated that the student had received a job offer in a multinational company in Oman, and will thus be able to clear the entire loan.
“Banks may be hyper-technical, but a court of law cannot ignore the ground realities. Therefore, I am of the considered opinion that SBI should disburse the loan to the college of the student forthwith,” Justice Kunhikrishnan said after hearing both sides.
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