inner banner
Madras HC Raps Bank on Education Loan

CHENNAI: Education loan includes full hostel fee and banks cannot question its quantum unless they suspect its authenticity, the Madras high court has ruled. 


The court issued the ruling after S Sivaprakash, a student from Cuddalore district, challenged the Indian Bank's refusal to consider his full hotel fee while sanctioning his education loan. Sivaprakash had joined Chennai's SRR Engineering College last year. He was charged Rs 12,500 as tuition and Rs 47,500 as hostel fee annually. The total four-year course fee worked out to Rs 2.4 lakh. The bank sanctioned the loan taking into account the full tuition fee but worked out just Rs 25,000 as yearly hostel fee. 


Justice D Hariparanthaman said that the bank could not question the rate charged by the college. "It has only to see as to whether the amount claimed as loan was bona fide or not." 


The judge said that the bank's claim in court that it had a 'uniform policy' of sanctioning only Rs 25,000 hostel fee for all courses and in all colleges was not duly supported by policy documents. The court said the bank's application contradicted this claim. 

Posted on 07 Oct 2011