Bengaluru: Bank told to refund interest subsidy on loan

BENGALURU: A branch of a nationalised bank in Bengaluru refused to grant interest subsidy for the education loan raised by a medico from disadvantaged background. After his studies, the doctor took the issue to a Bengaluru consumer court.
The bank officials were ordered to remit the subsidy amount to the borrower’s savings account with interest, apart from paying him Rs 35,000 as compensation for the unfair practice.
In 2014, HMT Layout resident NG Chetan Kumar and his father Ganganna approached the Sudhamanagar branch of the bank for an education loan. Ganganna, who earned only Rs 95,000 a year, produced a certificate from the tahsildar of Bengaluru North taluk to the bank authorities to show that they belonged to the economically weaker section of society. The father and son requested an education loan with interest subsidy offered by the government of India for students from poor backgrounds, which the SBI branch manager blatantly refused. Keeping in mind Chetan’s future, Ganganna offered his house worth Rs 95 lakh as collateral and secured a Rs 15-lakh loan.
Chetan went on to complete his MD at Texila American University by specialising in chest medicine. On September 18, 2020, the doctor cleared his SBI education loan, including interest and additional charges, thus saving his dad’s house. On January 4, 2021, he approached the manager of the bank’s Sudhamanagar branch demanding that he be refunded the interest subsidy amount for his fully paid education loan. Despite multiple requests, the bank claimed no interest subsidy shall be granted for an education loan involving collateral.
In February 2021, the doctor approached the Bengaluru Rural and Urban 1st additional district consumer disputes redressal forum in Shantinagar, with a complaint against SBI for deficiency in service. The bank’s lawyer argued the doctor had approached the court only after closing the loan amount, which meant he had the capacity to clear it and didn’t belong to economically weaker section of society. In case the doctor’s request is considered, a pandora’s box would be opened and every person who has cleared education loans with the bank would try to seek the refund of the amount paid in the form of interest, he added.
On May 17, the consumer forum noted that the bank’s approach was wrong. As per the bank’s scheme, collateral security is obtained for loans above Rs 7.5 lakh and up to Rs 20 lakh. The judges said the interest subsidy is to be given irrespective of the loan amount, provided the student belongs to economically weaker section of society and has a family income below Rs 4.5 lakh per annum. The annual income of parents has been raised to Rs 8 lakh per annum.
In view of this, the bank’s contention that the complainant is affluent as he owns property worth Rs 95 lakh and that he has repaid the loan and thus is ineligible for subsidy can’t be accepted.