Calcutta: The State Bank of India (SBI) was directed to process the loan application of a third-year law student by the High Court of Calcutta. She had applied for an education loan under the ‘West Bengal Student Credit Card Scheme’. It was framed by the State Higher Education Department to provide Credit Cards to students who pursue higher education.

The matter was adjudicated by Justice Moushumi Bhattacharya. Irina Mullick, a third-year law student, had her application for a loan of Rs. 2,50,000 was rejected by the SBI. The application was rejected because of the low CIBIL score of her father.

The Court opined that the state government should ensure that no student in financial need is forced to forego his or her education. “The State Government is thus requested to ensure that no student who is in need of money, is forced to sacrifice his/her education or future career aspirations for want of timely financial intervention,” said the Court.

The petitioner was directed to draft a fresh loan application under the State government scheme.  

“The SBI is directed to process the loan within two weeks from the date the application is made by the petitioner. The SBI shall also provide necessary assistance to the petitioner in this regard. Needless to say, the loan application shall be processed under the relevant Rules. The Bank shall be at liberty of seeking clarification from the Higher Educational Department of the State if the need arises”, the Court ordered further.

In 2019, the petitioner under the Student Credit Card Scheme applied for an education loan to continue her undergraduate studies. However, due to the petitioner’s father’s low CIBIL score, her loan application was refused by the SBI in a letter dated March 17, 2022.

The petitioner’s father was a co-borrower of the loan, and the SBI was forced to reject the loan due to the petitioner’s father’s low CIBIL score, according to counsel for the SBI before the Court. It was also claimed that the petitioner was unable to reapply for the loan with her mother as a co-borrower since the relevant portal would not allow for a second application.

The advocate for Transunion CIBIL informed the Court that the low score was based on information from multiple member banks and that the petitioner’s father owed Rs. 2,73,571 as of February 28, 2022. Alternative email IDs provided by the State government’s counsel, on the other hand, would allow the petitioner to apply for the loan with her mother as a co-borrower.

The Court noted that the SBI had denied the loan application based on the Scheme’s Rules and the petitioner’s father’s poor CIBIL score after reviewing the record. It was also pointed out that Rule 8(b) of the Scheme states that “The Banks will not insist on any security/collateral security in tangible/intangible form other than the co- obligation of the parents/legal guardians” and that the State Government will enter into a separate agreement with the banks on this.

It was observed by the Court that the education loan was to be given to needy students who could pursue their education despite the financial challenges. Furthermore, the State Government scheme took into account the financial contingency faced by the student to grant a loan on easy terms.

“The West Bengal Students Credit Card Scheme seeks precisely to address this issue which would be evident from the object of the Scheme which is to facilitate the availability of necessary funds for higher studies. The State Government proposes to support the students by providing them with Credit Cards needed to fund their studies”, the Court observed.

However, Justice Bhattacharya believed that only a few areas are there that the State government should address to make the Scheme effective immediately. Concerns such as in-operation of the portal for a second application, absence of parent as co-borrower, etc. were highlighted by the Court.

The Court went on to say that banks should consider low-risk regions, where the loan amount is only Rs. 2,50,000. It was also specified that the financial cover need should be proportional to the loan amount. The petitioner was allowed to submit a new loan application using the alternate email addresses provided by the State government.

The court opined, “The petitioner has only managed to pay for the 1st Semester and the substantial amount remains outstanding to the College for the last two years. The petitioner shall hence be at liberty of availing of the alternative email IDs provided by counsel for the State and make the necessary application for the Educational Loan under the Scheme.”

As a result, the petitioner was dismissed by the Court and ordered SBI to complete the loan application within two weeks.