Educational loans require co-borrowers with satisfactory credit scores, and banks may return applications based on creditworthiness.

J U D G M E N T

The grievance of the petitioner in the writ petition concerns the decision of the State Bank of India (the Bank) in returning an application preferred by the petitioner for grant of an educational loan.

2. The petitioner is pursuing the second year of her course, Bachelor of Commerce Model II – Finance and Taxation in Rajagiri College of Social Sciences, Kalamassery, Ernakulam, which is a three year course run by the college in association with the Association of Chartered Certified Accountants of United Kingdom. It is stated that the fees and related expenses of the course would come approximately to Rs.3.5 lakhs per year. Though the family of the petitioner could meet the expenses of the course for the first year, it is stated that as the family could not raise the funds required for meeting the expenses for the remaining years of the course, the petitioner has applied to the Vengalloor Branch of the Bank for an educational loan with her parents as co-borrowers. The educational loan applied for by the petitioner was for Rs.7.5 lakhs. Ext.P3 is the application preferred by the petitioner to the Bank in this regard. On the said application, the petitioner was issued Ext.P5 communication by the Bank stating that the Credit Information Reports obtained by the Bank in respect of the parents of the petitioner indicate various irregularities in relation to the credit facilities availed by them from the Bank. In addition, it is also stated in Ext.P5 communication that the father of the petitioner who has mortgaged an item of property in favour of the Bank has alienated the same to one Shine Damodaran before liquidating the liability. Ext.P5 communication is under challenge in the writ petition mainly on the ground that an application for educational loan cannot be rejected on account of the indigency of the parents of the applicant.

3. A statement has been filed on behalf of the Bank on

28.07.2021 stating, among others, that the credit score given by the Credit Information Company registered with the Reserve Bank of India and governed by the Credit Information Companies (Regulation) Act, 2005 to the father and mother of the petitioner who are co-borrowers of the loan applied for by the petitioner are only 543 and 532 respectively and the credit score required for the co-borrowers of the subject loan as per the credit policy of the Bank shall be more than 685. It is also stated in the statement that the parents of the petitioner are willful defaulters and the credit facilities availed by them have now become Non Performing Assets of the Bank.

4. An additional statement has been filed on behalf of the Bank on 02.08.2021 stating, among others, that the Bank has not rejected the application of the petitioner for educational loan and that it had only returned the same for want of creditworthiness for the co- borrowers. It is also stated in the statement that since the application is only returned, the petitioner is free to resubmit the application with co-borrowers whose credit score is satisfactory.

5. When the matter was taken up for hearing, in the light of the stand taken by the bank in the statement dated 02.08.2021, this Court required the learned counsel for the petitioner to ascertain from his client and report as to whether any of the siblings/relatives of the petitioner whose credit score is satisfactory would offer himself/herself to be the co-borrower of the loan sought by the petitioner. Similarly, this Court directed the learned Senior Counsel for the bank to ascertain from the bank and report as to whether the bank would grant the loan sought by the petitioner, if any of the siblings/relatives of the petitioner whose credit score is satisfactory would offer himself/herself as the co-borrower of the loan sought by the petitioner.

6. Today, when this matter was taken up, the learned counsel for the petitioner submitted that the brother of the grandmother of the petitioner one M.K.Haridas whose credit score is sa