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HC orders bank to provide education loan to student

HC orders bank to provide education loan
Exercising its suo motu powers, the Madras High Court bench today directed City Union Bank to provide educational loan to a student within 10 days and slapped a fine of Rs 10,000 on it for earlier rejecting her loan application and also not communicating it to her.

Justice N Kirubakaran, allowing a petition by K Lakshmi Priyadarshini, who had sought a loan to pursue her B.E. course at a college in Chennai, noted that the February 26 rejection order had not been communicated to her and directed that the fine amount be given to Chief Justice Relief Fund.

Counsel for the bank's Nagercoil Branch, produced the communication stating why her loan application was not considered, as she had secured only 69 per cent marks instead of the cut off marks of 85 per cent fixed by it.

"This letter has not been addressed to the petitioner nor has a copy been communicated to the her. The bank, after having received the order from the head office, cannot keep the rejection of the petitioner's claim and make the petitioner come to this court. This act of the respondent is deprecated and condemned."

On the argument of bank's counsel that the bank may fix the cut off marks under educational loan scheme, the Judge said the provision did not mean that it could fix very high percentage and deny education loans to candidates.

"A banking company which is discharging public function has to act fairly and judiciously as per the scheme formulated by the Ministry of Finance. Fixing of unreasonable higher percentage of marks itself would amount to denying of benefits to deserving candidates and it would frustrate the very purpose of the scheme" The Judge said the petitioner had secured overall 75 per cent marks.

By no stretch of imagination could such a student be termed as non-meritorious. "It is not known on what basis 85 per cent cut off mark is fixed by the bank.

Fixing of 85 per cent is irrational, unreasonable, unrealistic, arbitrary and capricious", the judge said and quashed the bank order, rejecting the loan exercising suo motu powers.

The petitioner submitted she had applied for a Rs 3.82 lakh loan, but it was not considered. She also submitted a reminder representation, but no action was taken.


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