The Madras High Court on Friday came down heavily on nationalised banks for sanctioning loans and issuing letters of undertaking to billionaire businessmen without insisting on sufficient collateral but adopting a totally different yardstick when it came to sanctioning loans to the poor and those belonging to the middle class.
Justices K.K. Sasidharan and P. Velmurugan said banks acted against high-profile loan defaulters only when the situation went out of control. However, the same banks went to the extent of spending money on unnecessary litigation when it came to denying loans to the penurious.
The stinging observations were made before imposing costs of ₹25,000 on a senior manager of Kelur branch of IOB in Tiruvannamalai district for filing a writ appeal in 2013 against a single judge’s November 30, 2012, order to consider granting a loan to a student.
The bank had succeeded in dragging the hearing for five years, by which time the student completed her course, the judges said. “The Himalayan arrears in courts and the inability of the system to prioritise the cases also contributed to the delay and denial of justice to the student,” they added.
Pointing out that the petitioner was the daughter of a farmer and was in dire need of money when she joined the engineering course in the academic year 2011-12, the Division Bench pointed out that the bank could have at least offered her the money spent by it on the present litigation for the last five years.
Authoring the judgment for the Bench, Mr. Justice Sasidharan said: “Banks are not concerned with directives issued by the Central government and Reserve Bank of India to help the poor students by giving them education loan. Such instructions are violated by the banks with impunity.
“The present case is a classic example of how the IOB dragged the daughter of a poor farmer belonging to a most backward community in Tamil Nadu from pillar to post without considering her application for an education loan of ₹3.45 lakh to enable her to pay the college fees and complete the course.”
Stating that no materials had been placed before the court to show that education loan defaulters had contributed to accumulation of bad loans by nationalised banks, the judges said that on the other hand, it was common knowledge that about 50 corporates in the country had wilfully defaulted loans to the tune of ₹48,000 crore.
Expressing surprise over the reluctance of banks to sanction education loan in the absence of sufficient collateral security, the judges wondered why was education not considered an asset by the banks. “The country would be denied of the services of scientists, doctors, engineers and other professionals without financial assistance to deserving students.
“Educated youth are an asset to the nation and their talents can be utilized for the growth of the country. Banks must realize this fundamental fact. The professional degree obtained by a student must be considered as an asset like any other secured asset by the banks,” the Bench observed before dismissing the appeal and terming it as an abuse of process of court.
