HC directs bank to disburse last installment of education loan

Updated on: Friday, July 29, 2011

Madras High Court directed the Oriental Bank of Commerce to disburse the last installment of education loan money due to a student, whose parents were defaulters in their repayment of another loan.
   
Justice D Hariparanthaman in his order said the bank should not stop the education loan of the petitioner, final year B Tech student R Sahana, otherwise action of the bank would frustrate the very purpose of education loan scheme.
   
"If she discontinues her studies at this stage, the loan so far lent could become sticky. Even for the interest of the bank, it should see that the loanee completes her studies so that the bank could get the loan amount from the student," he said.
   
R Sahana, a B Tech (Biotechnology) student at Rajalakshmi Engineering College in Thandalam here, was sanctioned Rs 2.20 lakh by the Oriental Bank of Commerce as education loan. The bank denied to disburse the last installment of Rs 55,000 to the student in her last year of education since her parents had received a loan from the bank in their inpidual capacity for their business and later failed to repay it.
   
Noting that the bank was "not justified" in taking the student's parents as co-applicants in the education loan, not complying with the norm that education loans below Rs 4  lakh do not need security, the judge said that he was inclined to direct the bank to forthwith the amount to her college for her final year. .

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