Educational Loans: Banks Liable for Timely Disbursement, Says Kerala HC
Justice N NagareshKOCHI: A public sector bank has to ensure timely disbursement of educational loans to students, even by relaxing internal guidelines, as such loans fall under priority sector, said the Kerala High Court.
Justice N Nagaresh ruled against Bank of India on a petition (WP-C No. 14727/2020) filed by a student through advocate Alexander Joseph challenging the internal guideline that loan for education abroad will be disbursed only after visa is stamped. The student had contended that at least half of the fees have to be paid for visa to be stamped as per rules of the foreign university and the destination country and the bank should pay such fee to the university from the loan already sanctioned.
In the judgment, the court said, “The 1st respondent (Bank of India) is a public sector bank. The education loan is falling under priority sector and is intended to benefit needy and meritorious students aspiring for higher education. The Scheme for advancing education loan is framed at the instance of Government of India, RBI and Indian Banks Association. In such circumstances, it is the obligation of the 1st respondent-Bank to ensure that the petitioner who has provided all requisite security for repayment of loan, is granted the loan at the right time, if necessary in relaxation of their internal instructions.”
The court pointed out that the condition, that at least half of the fees should be paid in advance, is not one that can be altered by the student. The bank’s rule that visa should be stamped prior to disbursal of loan is not intended primarily for securing the loan amount, the court said. In such cases, the bank has to relax the condition that visa is required, the court held.
Further, the court rejected the bank’s contention that the petitioner should exhaust the funds available in his bank account prior to disbursal of the loan. Any further delay in disbursing the loan would adversely affect the petition, the court said while ordering the bank to pay the fees to the university.
Justice N Nagaresh ruled against Bank of India on a petition (WP-C No. 14727/2020) filed by a student through advocate Alexander Joseph challenging the internal guideline that loan for education abroad will be disbursed only after visa is stamped. The student had contended that at least half of the fees have to be paid for visa to be stamped as per rules of the foreign university and the destination country and the bank should pay such fee to the university from the loan already sanctioned.
In the judgment, the court said, “The 1st respondent (Bank of India) is a public sector bank. The education loan is falling under priority sector and is intended to benefit needy and meritorious students aspiring for higher education. The Scheme for advancing education loan is framed at the instance of Government of India, RBI and Indian Banks Association. In such circumstances, it is the obligation of the 1st respondent-Bank to ensure that the petitioner who has provided all requisite security for repayment of loan, is granted the loan at the right time, if necessary in relaxation of their internal instructions.”
The court pointed out that the condition, that at least half of the fees should be paid in advance, is not one that can be altered by the student. The bank’s rule that visa should be stamped prior to disbursal of loan is not intended primarily for securing the loan amount, the court said. In such cases, the bank has to relax the condition that visa is required, the court held.
Further, the court rejected the bank’s contention that the petitioner should exhaust the funds available in his bank account prior to disbursal of the loan. Any further delay in disbursing the loan would adversely affect the petition, the court said while ordering the bank to pay the fees to the university.
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