In the case of Noel Paul Fredy v State Bank of India, A student requested an education loan from the State Bank of India in a petition. His application was nonetheless turned down by the bank because his CIBIL score was only 560. Before the high court filed a petition in opposition to the bank’s decision, they contested it.
The petitioner had taken out two loans, one of which was overdue by 16,667 and the other had been wiped off by the bank, according to the respondent, who maintained that the bank and explained why the CIBIL score was so low. He contended that the Court should not make an interim order in the petitioner’s favour as a result. They further argued that the Credit Information Companies Act, 2005, the Credit Information Companies Rules, 2006, and State Bank of India circulars ban loan distribution in such circumstances.
The petitioner asserted that if the loan amount is disbursed right away, difficulties will result. Additionally, he disclosed to the court that the petitioner has already accepted a job offer from a multinational corporation and will thus be able to pay off the entire loan balance.
Kerala High Court order
Banks shouldn’t refuse education loans to students just because their CIBIL score, as calculated by Credit Information Bureau (India) Limited, is poor, according to the Kerala High Court’s single judge bench of Justice PV Kunhikrishnan.
The bank noted that as today’s students will be tomorrow’s nation-builders, banks must view loan requests for school financing with compassion. Future nation-builders will be students. They will have to guide this nation in the future. Simply because a student applied for an education loan but had a low CIBIL score, several people felt that their application should not have been denied by the bank.
As the Court stated Even if banks may be extremely technical, a court of law cannot overlook the facts of the situation. Therefore, the defendants must immediately disburse the petitioner’s debt to the College. The Court stated in its interim judgement that the respondents will be given the order to sanction and distribute the education loan of 4,07,200 to the petitioner’s college immediately. The Bank may submit counter-affidavits or ask for an early hearing of the petition, but the Court kept both options open.