Madras High Court rules: Banks can't insist on minimum 60% marks to extend educational loans


Please read the media reports dated 9th July 2014


HC orders grant of loan to management quota student

Madras High Court today upheld order of a single judge directing Indian Overseas Bank to grant educational loan to an engineering student, whose plea for the assistance was rejected on the ground he secured a seat under management quota with less than 60 per cent marks. 

Dismissing an appeal by IOB's Tiruppur Branch challenging the single judge's June 20, 2013 order, a division bench comprising Justice N Paul Vasanthakumar and Justice M Sathyanarayanan directed the bank to grant the loan to the son of one A Ravi within two weeks from the receipt of the order. 

The bench said the issue of eligibility has already been settled by the announcement of the Union Finance Minister that students admitted in the management quota were also entitled to get the education loan and all the banks were directed to adopt the said Policy. 

On the basis of the announcement, a review meeting of all the Chief Executives of the PSU banks was held on September 27, 2012 which resolved that the Managing Committee considered the recommendations made by the Indian Banks Association Committee on Educational Loan Scheme and after detailed discussions decided to finance the meritorious students, who pursue courses under Management quota, the court said. 

"In the guidelines framed in the Review Meeting, nowhere it is stated that educational loan can be sanctioned only for those who have secured 60 per cent and more marks," it said.


Banks can't insist on minimum 60% marks to extend educational loans: Madras high court

CHENNAI: Banks cannot fix 60% of marks as minimum required percentage for extending education loan to students, 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, said on Wednesday that it was incorrect on the part of the bank to deny loan to him on the ground that he has scored only 59% of marks and not the minimum required percentage of 60%.

After being denied an education loan by the Indian Overseas Bank, A Ravi moved the high court for a direction. In June last year, a single judge directed the bank to extend loan to the boy, saying banks cannot deny loans on the ground of minimum marks percentage, that too after he is given admission under management quota.

The bank filed the present 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.

Rejecting the submissions, the bench said, "The Government of India launched the scheme of providing educational loans to the economically disadvantaged people, through nationalised banks. Sanction of educational loan is not free, but it is repayable with interest at a later point of time, of course, at reduced rate of interest. The whole idea behind the scheme is to finance the economically disadvantaged people. 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 should bear the government's policy in mind while sanctioning educational loans covering 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 is also stated in the decision that loan applications have to be disposed of within a period of 15 days to one month.

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