In his order, Judge PV Kunhikrishnan ordered the bank to immediately pay Rs 4,07,200/- to the petitioner’s college (file photo/PTI)
The Kerala High Court has left the case open and asked the bank to feel free to file a counter affidavit and may also request an early hearing of the matter.
As a step towards giving students easy access to a student loan, the Kerala High Court has ruled that students’ student loan application cannot be rejected on the basis of a low CIBIL (Credit Information Bureau (India) Limited) score. In his order, Judge PV Kunhikrishnan ordered banks to take a “humanitarian approach” when reviewing a student’s student loan application.
Justice PV Kunhikrishnan stressed that students are tomorrow’s nation-builders and have a responsibility to lead the country into the future. As reported by Live Law, the Supreme Court of Kerala noted, “Simply because there is a low CIBIL score for a student, who is applying for a loan for education, I am of the opinion that the application for a loan for education had not may be rejected by the bank.”
The case was filed by a student who had availed two student loans, one of which is overdue for Rs 16,667 and the other has been written off by the bank. Due to the problems with previous student loans, the petitioner’s CIBIL score was low. The petitioner’s counsel argued that if the petitioner does not receive the amount immediately, the petitioner will be in trouble. The counsels relied on the student’s petition on a 2020 case, Pranav SR v. The Branch Manager and Anr. The petitioner’s counsel claimed that the client has received a job offer from a multinational company and would thus be able to release the full loan amount.
In the 2020 case, the court ruled that an unsatisfactory credit score of a student’s parents cannot be a reason to reject a student loan application. The court cited that a student’s ability to repay after finding a job should be the deciding factor under the scheme. On the other hand, the respondents argued that the court’s comment goes against the plan of the Indian Banks Association as prescribed by the Reserve Bank of India.
The Respondent further argued that the Credit Information Companies Act, 2005, the Credit Information Companies Rules, 2006 and the Circulars issued by the State Bank of India restrict student loan disbursement in situations similar to the petitioner’s. In his order, Judge PV Kunhikrishnan ordered the bank to immediately pay Rs 4,07,200/- to the Petitioner’s College.
The Kerala High Court has left the case open and asked the financial institution to feel free to file a counter affidavit and may also request an early hearing of the matter.
