Collateral must for education loan: HC

No one, including the economically poor, can demand education loan above ₹4 lakh without submission of collateral security, the Madras High Court has said. It held that banks were liable to sanction loan only in accordance with guidelines governing the subject and therefore they could not be ordered by a court of law to deviate from such norms.

Justice S. Vaidyanathan held so while disposing of a writ petition filed by a MBBS student of Shri Sathya Sai Medical College and Research Institute in Kancheepuram district. The petitioner had sought for a direction to the manager of Indian Bank, Pallikaranai branch here to sanction education loan of ₹ 63.90 lakh towards her revised tuition fees.

‘Up to the bank’

After recording the submission of the college that it shall permit the petitioner to continue if she agrees to pay the fees either by availing loan or through her own funds before appearing for the university examinations, the judge said that the bank would have to necessarily process her loan application as per guidelines.

“The petitioner cannot demand a higher amount as loan without any security and that sanction of loan is covered by the guidelines issued by the bank for availing education loan. If the fee is not paid, the petitioner will not be permitted to sit for the examination,” the judge observed.