Kerala HC: Banks Cannot Deny Educational Loan Due To Liabilities Of Parents

Who is the Petitioner

• The name of the case is Devika Soniraj v. The Zonal Manager, Bank of India.
• The petitioner is a student at the Bachelor of Ayurveda Medicine and Surgery.
• Her father has a small-time business; the shop had to be closed down due to the pandemic.
• She secured a seat via centralized seat allotment process based on her rank in the National Eligibility-cum-Entrance Test.

Background

• The full amount of education could not be raised so her father approached the bank for raising a loan of Rs. 7,50,000/-.
• Her loan request was rejected by the bank, as a result of which she approached the High Court.
• The bank contended that the father does not have enough income and has a liability on his head due to which they could not grant loan amount.

Court’s Observation

• The Indian Bank was directed by the Kerala High Court to grant loan to the students even when the parents have a liability.
• The concept of education loan is to financially support a meritorious student who does not have the resources to afford the education.
• The Court noted that accepting the bank’s contention would defeat the purpose of education loan.
• The Model Education Loan Scheme was for pursuing higher education and it is not to be assessed according to the financial status of the parents but on the estimated future earnings of the student.

What do you think of the bank rejecting the loan application? Tell us in the comments below!