Banks: Penalty for failing to pass education loans

Moneylife Digital Team 10 September 2012

From now on, education loan applicants will now why their applications got rejected

To make sure that education loans are not denied to eligible students, finance minister P Chidambaram has announced that bank officers rejecting applications without sufficient reasons would be penalised.

“No application should be turned down by the officer who is receiving it. It can only be turned down by one level higher. They will now penalise branch managers who turn down, say, 5/10 deserving applications which are overturned by a superior officer,” Mr Chidambaram told reporters. The Indian Bank Association (IBA) would come out with a new circular on education loans in the next few days, he said.

“Bank loan is the right of every student who meets the parameters. No bank can turn away an applicant. Every application for a bank loan must be received and acknowledged and every deserving candidate must be given the loan if the student meets the parameters,” Mr Chidambaram said.

Education loans are granted to Indian nationals for pursuing higher studies in India or abroad. As per its website, the State Bank of India (SBI) gives loans up to Rs10 lakh for studies in India and Rs30 lakh for education abroad. Such loans are usually extended to candidates pursuing professional courses from approved universities or from autonomous institutions like IITs and IIMs, among others.

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Ajit Misquitta

1 decade ago

Another new scam being perpetrated by the HDFC bank among others is to force loan takers to purchase an insurance policy at their own cost even though they may have other insurances before giving out personal loans. This practice smells of misselling and I believe the RBI should initiate an investigation and refund all such payments taken under this ruse to unsuspecting customers.