Criteria for educational loan rejection upheld based on prior defaults and adverse credit history.

J U D G M E N T

Petitioner is aggrieved by rejection of his request for providing educational loan. By Ext.P2 communication dated 18.06.2025, the 1^st respondent rejected the application for educational loan submitted by the petitioner. The Branch Manager, has cited the following reasons pointed out by SBI RACPC II, Ernakulam.

“1) A Consumer Loan for Rs.33,000/-(Rs.Thirty Three Thousand only) availed by Sri.Arjun Babu on 11.12.2023 and closed on 25.02.2025 is in Settled/Written off status.

2) A Personal Loan for Rs.1,00,000/-(Rs.One Lakh only) availed by Sri.Arjun Babu on 06.01.2018 is in overdue status by Rs.1,24,299/-.”

2. The petitioner contends that he is undergoing a three-year LLB program under the Faculty of Law University, Delhi. He states that he is hailing from a middle-class family and he is prepared to offer co-lateral security for the loan. He further states that his mother is a government employee and she can be a co- borrower. According to the petitioner, the Banks has acted illegally and arbitrarily by rejecting the application for educational loan.

3. A statement has been filed by the learned counsel appearing for the Bank. It is pointed out in the statement that as per the CIC report of the petitioner obtained from the credit information company - CIBIL, the petitioner had availed a personal loan of Rs.33,000/- which was settled by the lender by writing of an amount of Rs.2,588/-. Also, the petitioner had availed a personal loan of Rs.1 lakh that is overdue by Rs.1,24,299/- and categorized as doubtful asset. In the CIC report of the petitioner obtained from the credit information company CRIF Highmark also, the same facts were noticed. It is stated by the Bank that the Banks and other credit institutions have issued instructions/circulars to decide the eligibility of the proposed borrower or guarantor to get credit facilities from the credit institutions. This mainly depends on the credit score determined on the basis of information regarding the borrowers or guarantors who have already availed facilities from other credit institutions or who have earlier availed credit facilities and became defaulters and in respect of whom the Bank had suffered difficulties for recovery or loss. In the case at hand, according to the Bank, the CIBIL score of the petitioner is low and adverse reports have been provided by the credit information companies. The Bank states that according to the norms followed, educational loan cannot be granted for a person having profile like that of the petitioner.

4. Heard the learned counsel for the petitioner and also the learned Senior Counsel appearing for the respondent Bank.

5. Learned counsel for the petitioner reiterated the contentions raised in the writ petition and submitted that inthe petitioner is prepared to offer co-lateral security and the same will be sufficient to protect the interest of the Bank. 6. Learned Senior Counsel appearing for the Bank on the other hand submitted that in the scheme for providing educational loans, accepting such co-lateral security is not envisaged and the nature of the educational loan is different from other loans provided by Banks and financial institutions. The learned Senior Counsel relied on the judgments of this Court in W.P.(C) No.25211 of 2022 and 29966 of 2024 and submitted that in cases involving similar circumstances, this Court had dismissed the writ petitions.

7. On a perusal of the judgments cited I find considerable merits in the contentions raised by the Senior Counsel for the respondent-Bank. Similar contentions have been rejected by this Court in several judgments including the judgments pointe