Kerala High Court

Kerala High Court: In a Writ Petition seeking appropriate directions for State Bank of India (‘SBI’) regarding sanction and disbursement of Education Loan of Rs 4,07,200 to the petitioner with a low CIBIL score of 560, P.V. Kunhikrishnan, J. directed the Bank officials to sanction and disburse the said amount considering the fact that the student had already got a job offer from a Multi-National Company and was going to complete his course on 31-5-2023.

Facts reveal that the petitioner availed two loans and one loan was overdue for Rs. 16,667, while the other loan was written off by the bank, which was the reason that the petitioner’s CIBIL score was low at 560 points.

The Court referred to Pranav S.R. v. State Bank of India, 2020 SCC OnLine Ker 2536 wherein, similar facts related to CIBIL score of parents were considered and the Court held that “unsatisfactory credit scores of the parents of the petitioner cannot be a ground to reject an educational loan in view of the fact that the repayment capacity of the petitioner after his education should be the deciding factor.” The Court also referred to K.M. George v. State Bank of India, 2020 SCC OnLine Ker 18596 while handling similar facts.

The respondents seriously opposed the grant of any interim order for being against the scheme framed by the Indian Banks Association as directed by the Reserve Bank of India (‘RBI’). Reference was also made to Credit Information Companies Act, 2005, the Credit Information Companies Rules, 2006 and the Circulars issued by SBI prohibiting disbursement of loans in similar facts.

On the other hand, the petitioner mentions having received a job offer in a Multi-National Company while pressing on his ability to repay the loan in entirety in the coming future.

The Court found the balance of convenience in favour of the petitioner for being a student, who will be completing his course on 31-5-2023, who also obtained a job in Oman. The Court observed that “While considering Education Loan application, a humanitarian approach is necessary from the Banks.”

The Court viewed that simply because the CIBIL score of an applicant who applied for Student/Education loan is low, the application ought not have been rejected by the bank. It explained that “Banks may be hyper technical, but a court of law cannot ignore the ground realities.”

Thus, the Court directed SBI officials to sanction and disburse the Education loan of Rs. 4,07,200/- to petitioner’s the College.

[Noel Paul Fredy v. State Bank of India, 2023 SCC OnLine Ker 3507, Ordre dated 30-5-2023]

Order by: Justice P.V. Kunhikrishnan

Advocates who appeared in this case :

For Petitioner: Senior Advocate George Poonthottam, Advocate Nisha George, Advocate Ann Maria Francis;

For Respondents: Standing Counsel Jithesh Menon, Senior Advocate K.K. Chandran Pillai, Advocate Ambily S.

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