Students are nation builders; banks should not deny them education loans over low CIBIL score: Kerala High Court

The Kerala High Court on Tuesday observed that banks should not deny education loans to students merely because their CIBIL score (credit score computed by Credit Information Bureau (India) Limited) is low. [Noel Paul Fredy v State Bank of India].Justice PV Kunhikrishnan observed that students are the nation builders of tomorrow and, therefore, a humanitarian approach is necessary when banks consider education loan applications."While considering 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 low CIBIL score to a student, who is an applicant for Education loan, I am of the considered opinion that, Education loan application ought not have been rejected by Bank," the Court said..The petitioner in this case was a student who sought an education loan from the State Bank of India. The bank, however, rejected his application as his CIBIL score was only 560. Senior advocate KK Chandran Pillai appeared for the bank and explained that the CIBIL score was so low because the petitioner had availed two loans, one of which was overdue for ₹16,667 and the other was written off by the bank. Therefore, he argued that the Court should not grant any interim order in favour of the petitioner. Pillai also contended that the Credit Information Companies Act, 2005, the Credit Information Companies Rules, 2006 and the circulars issued by the State Bank of India prohibits disbursement of loan in such situation.Senior Advocate George Poonthottam, appearing for the student-petitioner, submitted that unless the loan amount is disbursed immediately, the petitioner will be in trouble. He also informed the Court that the petitioner already has a job offer from a multi-national company and, therefore, will be able to clear the entire loan amount. .The Court opined that even though Pillai had raised some legal contentions, the balance of convenience was in favour of the petitioner, especially since he already has a job offer and would complete his course on May 31, 2023."Here is a case, where the petitioner obtained a job offer too. Banks may be hyper technical, but a court of law can not ignore the ground realities. Therefore, I am of the considered opinion that the respondents shall disburse the loan to the College of the petitioner forthwith. Therefore, there will be a direction to the respondents to sanction and disburse the education loan of ₹4,07,200 to the College of the petitioner forthwith," the Court said in its interim order.However, the Court left it open for the bank to file counter affidavits or seek early hearing of the petition..[Read Order]