Banks can't fix 60% marks as cutoff for study loans: Madras HC

CHENNAI: Banks cannot fix 60% of marks in Plus Two as minimum required for extending education loan to students joining engineering courses, the Madras high court has ruled.

A division bench of justice N Paul Vasanthakumar and justice M Sathyanarayanan, coming to the aid of an engineering student who got admission under management quota but denied a bank loan, on Wednesday said it was incorrect on the part of the bank to deny him loan on the ground that he scored only 59% marks and not the minimum required 60%.

After being denied loan by the Indian Overseas Bank, A Ravi moved the high court. In June last year, a single judge directed the bank to extend loan, saying banks cannot deny loans on the ground of lack of minimum marks, that too after the student got admission under management quota.

The bank filed an appeal saying candidates who have secured 60% marks and above alone are eligible to get education loan, as they alone can be treated as meritorious candidates.

The bench, rejecting the submissions, said: "The government of India launched the scheme of providing education loans to economically disadvantaged people through nationalised banks. Sanction of educational loan is not free but is repayable with interest at a later point of time, of course, at a reduced rate of interest. The whole idea behind the scheme is to finance the economically disadvantaged people in their educational career. It is a social commitment for the upliftment of weaker, vulnerable and other sections of the society. It is a social welfare measure. In a way, it is some sort of social banking."

The judges said public sector banks and other financial institutions must bear the government's policy in mind while sanctioning educational loans to cover the genuine, reasonable and justified educational expenses and relieve the students and their parents from pressing financial crisis.

In this regard, the judges also pointed out that a review meeting of top bankers decided on September 27, 2013 that they would extend loans to meritorious students who get admission under management quota. It was also decided that loan applications have to be disposed of within a period of 15 days to one month.

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