The Kerala High Court has held repayment possibilities of educational loans should not to be assessed based on the financial position of the parents but it should be based on the projected future earnings of the students on employment after education.
The Court was hearing a petition filed by a BAMS student challenging the decision of Bank of India in declining her request for an educational loan. As per petitioner, she had paid the fee payable for the first year of the course and a portion of the fee payable for the second year. The petitioner along with her father applied to the bank for an educational loan of Rs. 7,50,000/- for which no security is insisted by the bank in terms of its Educational Loan Scheme.
The petitioner was denied by the bank citing that she had not made available satisfactory evidence to show that she will be in a position to pay the deficit fee and that the stand of the petitioner that the deficit fee would be met by her father from his business income cannot be accepted, as her father is not generating any income from his business.
The Bench of Justice P.B Suresh Kumar noted, “the object of all Educational Loan Schemes formulated by Banks pursuant to the direction issued by the Reserve Bank of India in terms of the said Circular is to ensure that a meritorious student shall not be deprived of opportunity to pursue higher education merely on the ground that he/she does not have resources for the same.”
The Court further observed that the revised guidance notes on Model Education Loan Scheme for pursuing higher education issued by the Indian Banks’ Association in the year 2015 clarify that the loan scheme has been conceived by them as a socially and economically relevant scheme aiming to provide need based finance to meritorious students for taking up higher education and that repayment possibilities of educational loans under the scheme are not to be assessed based on the financial position of the parents, but based on the projected future earnings of the students on employment after education.