Yesterday, the single bench of the Kerala High Court headed by Justice P.V. Kunhikrishnan held that an application for an education loan by a student could not be rejected on the ground of a low CIBIL score.

"Students are the nation builders of tomorrow. They have to lead this country in future. Simply because, there is a low CIBIL score for a student, who is an applicant for an Education loan, I am of the considered opinion that the Education loan application ought not to have been rejected by Bank," the Court observed.

On the contrary, the counsels for the respondents argued that granting an interim order in this case, in accordance with the reliefs sought for by the petitioner, would be against the scheme framed by the Indian Banks Association as directed by the Reserve Bank of India.

Further submitted that the Credit Information Companies Act, 2005, the Credit Information Companies Rules, 2006 and the Circulars issued by the State Bank of India prohibits the disbursement of loan in situations such as that of the present petitioner.

"Here is a case, where the petitioner obtained a job offer too. Banks may be hyper-technical, but a court of law can not ignore the ground realities," the Court observed while directing the respondents to disburse the amount of Rs.4,07,200/- to the College of the petitioner forthwith.

The Court added that all the contentions of the respondents would be left open and that they would be free to file a counter affidavit and could also file a petition for an early hearing of the present writ petition. It directed the Registry to post the present writ petition for hearing in the event of such a petition being filed.

The petitioner was represented by Senior Advocate George Poonthottam, and Advocates Nisha George, and Ann Maria Francis. The Standing Counsel for SBI Jithesh Menon, Senior Advocate K.K. Chandran Pillai, and Advocate Ambily S. appeared on behalf of the respondents.

Case Title: Noel Paul Fredy v. State Bank of India & Anr.