Case Law Details
Kiran David Vs Assistant General Manager State Bank of India (Kerala High Court)
The petitioners are aggrieved by the denial of education loan. The petitioner wanted to study Post Graduate Diploma in Management (Securities Market) in the National Institute of Securities Markets (NISM), Navi Mumbai. The petitioner submitted application for education loan of ₹7,30,000/- to the Manager of State Bank of India. The petitioner had submitted all documents required by the Bank in support of the application. The Bank, however, rejected the loan application submitted by the petitioner. The Bank rejected the application for education loan for the reason that the CIBIL score of the co-applicant is not up to the mark. The petitioner challenges communication and seeks to direct the bank to process his loan application.
The petitioners state that the Reserve Bank of India had affirmed that education loan is a futuristic loan and the aim of the educational assistance is for providing financial support from the banking system to deserving/meritorious students for pursuing higher education in India and abroad. Rejection of the loan application submitted by the petitioners goes against the mandate given by the Reserve Bank of India through their various Circulars.
The respondent-Bank submitted that the educational loan policy of the State Bank of India is that the loan would be sanctioned jointly in the name of the student and his/her parents/guardians. The parent/guardian would be a co-borrower in the loan. The Bank has to ensure that the co-borrower has necessary credit discipline. The Bank has the prerogative to depend upon the Credit Information Report.
The educational loans, along with instalment and leases, and small business facilities and commitments, are classified as retail loans as per Ext.R2(b) Circular issued by the Reserve Bank of India, contended the respondents. Consequently, in Ext.R2(c) Master Circular dated 20.03.2021 issued by the State Bank of India, it was provided that Borrower/Co-borrower/Guarantor should not have any adverse credit history. In case of secured loans, CIBIL Score should be -1 or more than 591 and in the case of unsecured loans, CIBIL Score should be -1 or more than 685.
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