HC declines to direct bank to grant education loan

Updated on: Wednesday, December 14, 2011

Madurai Bench of the Madras HC declined to direct a nationalised bank to grant educational loan for an MBA student in violation of policy framed by Indian Bankers' Association on cut-off marks.

The prescription of a minimum percentage of mark for students was to ensure that the student had employment potential, Justice V.Ramasubramanian held dismissing a plea filed by A.Kasinathan, an MBA student of  N P R College of Engineering and Technology.
 
"If the student has employment potential, the loan may not become non-performing asset. But a student, who is not meritorious, may himsef turned down to be a  non-peforming asset both to his parents and to the bank," the Judge said.
 
The scheme's very objective was remove the financial handicap for otherwise meritorious students. If the bank considered that the student had any other handicap, such as lack of merit, it was open to it to refuse loan. After all, the scheme envisaged recovery of the loan after completion of studies and after students take up employment, the judge said.
 
"In a society like ours, the employability of a person depends upon various factors, one of which is certainly is the academic performance.The court may not presume that every failed student may hit the jackpot like Steve Jobs of Apple Inc.Out of hundreds of students who perform poorly,one may turn out to be successful in life."
 
The Judge referred to RBI's clarification that guidelines only provided broad framework for providing educational loan and implementing banks will have discretion to make changes.
 
"If the Indian Bankers' association had taken a decision to fix the cut-off mark at 60 per cent,for those who secured admission under the management quota,the court sitting in writ jurisdiction could not issue a direction to the bank to dilute the said policy," the judge said.
 
The petitioner submitted that he had applied for Rs.1.43 lakh loan for pursuing his MBA course after scoring 77 per cent in the first year of the MBA course. But the Bank said he had scored only 48.4 per cent in the BBA, and he was not eligible for loan as per the new guidelines.

More Education news

• Tribal students allege loan denial, bank refutes claim
• Mobile phone, junk food banned in Nepal schools
• HC directs bank to disburse last installment of education loan
• Banks on the lurch for more prospective students
• Panel suggests loan scheme after proposing fee hike at IIT