Bank fixed ‘unrealistic’ minimum requirement of marks: HC

The Madras High Court bench here has imposed a cost of Rs.10,000 on a private sector bank for fixing an ‘unrealistic and unreasonable’ minimum requirement of marks for sanctioning educational loans to students.

Justice N. Kirubakaran imposed the cost on the City Union Bank (CUB) based on a petition filed by K. Lakshmi Priyadharshini, who completed class XII and secured a seat to pursue a B.E. Computer Science course at a private engineering college in Chennai.

Through her counsel K.P. Narayanakumar, Ms. Priyadharshini claimed that she had applied for a loan of Rs 3.8 lakh at the Nagercoil Branch of CUB.

The petitioner had scored 69 per cent in the core subjects in the higher secondary and 75 per cent overall, the counsel added.

According to Mr. Narayanakumar, the branch manager of CUB rejected the petitioner’s application for an educational loan.

In his letter dated February 26, 2013, the manager claimed that students who scored 85 per cent and above alone were entitled to an educational loan from the bank under the meritorious category.

The petitioner’s application was rejected because she had scored only 69 per cent in the core subjects, the counsel said quoting the manager’s letter.

Mr. R. Pandivel, the counsel who appeared on behalf of the bank, contended that, as per the revised guidelines of the Model Educational Loan Scheme framed by the Union Ministry of Finance, the banks were free to fix the cut-off mark or percentage as a criterion for providing educational loans.

The CUB had fixed 85 per cent as the minimum requirement for meritorious students to secure a loan as per the guidelines, he argued.

In his order, Justice N. Kirubakaran observed that when 60 per cent is termed as first class, the bank cannot fix the minimum cut-off as 85 per cent to provide an educational loan.

“The Model Educational Loan Scheme did not mean that the bank can fix very high percentage of marks (as minimum requirement) and deny the loan to the candidates.

The banks should act fairly and judiciously”, the judge observed.

In his order, the judge directed the bank to sanction the loan to the petitioner within ten days and instructed the manager to pay Rs 10,000 to the Chief Justice Relief Fund of the High Court within two weeks.

“A student who got 75 per cent marks overall cannot be termed as non-meritorious. Fixing unreasonable percentage of marks for granting loans would amount to denying benefits to deserving candidates. The act is irrational, unreasonable, arbitrary and capricious”, Justice N. Kirubakaran ruled.

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