Poor get a raw deal in bank loans, says HC
‘No Financial Institution Asks For Security From The Rich’
TIMES NEWS NETWORK
Chennai: Banks provide loans to billionaire businessmen without any collateral security, but adopt a different yardstick when itcomes to sanctioning loans to the poor, the Madras high court has said, slamming banks.
Referring to the burning letters of understandings (LOU) issue, a division bench of Justice K K Sasidharan and Justice P Velmurugan said: “Banks are taking action to recover bad loans only when the scams spin out of their control.”
The bench then pulled up the Indian Overseas Bank (IOB) for having made the daughter of a poor farmer run from pillar to post, without considering her application for an education loan of ₹3.45 lakh. Since the bank failed to consider her application, she moved the high court in which a single judge issued a direction to reconsider her request based on the bona fide certificate issued by the college.
However, challenging the single judge order, the bank filed the present appeal before the bench. Counsel for the bank contended that the applicant had completed her course in 2015 and as such, the prayer in petition had become infructuous.
When the plea came up for hearing, the bench said: “The banks have no case that the education loan defaulters have contributed for the accumulation of the bad loans. We are informed that the cumulative total of more than 50 companies or groups each with over ₹250 crores of loan arrears, classified as wilful defaulters, works out to about ₹48,000 crore.”
Noting that the banks are reluctant to sanction education loan in the absence of sufficient collateral security, the court said education was notconsidered as an “asset” by banks. The country would be deprived of the service of scientists, doctors, engineers and other professionals, in case financial assistance is not given to the deserving students to come up in life. The educated youth are an asset to the nation and their talents can be utilized for the growth of the country. Banks must realise this fundamental fact.”
Holding that the appeal is nothing but an abuse of process of court, the bench then dismissed the bank’s plea and imposed an emplary cost of ₹25,000 on the bank, payable to the student within two weeks.
‘No Financial Institution Asks For Security From The Rich’
TIMES NEWS NETWORK
Chennai: Banks provide loans to billionaire businessmen without any collateral security, but adopt a different yardstick when itcomes to sanctioning loans to the poor, the Madras high court has said, slamming banks.
Referring to the burning letters of understandings (LOU) issue, a division bench of Justice K K Sasidharan and Justice P Velmurugan said: “Banks are taking action to recover bad loans only when the scams spin out of their control.”
The bench then pulled up the Indian Overseas Bank (IOB) for having made the daughter of a poor farmer run from pillar to post, without considering her application for an education loan of ₹3.45 lakh. Since the bank failed to consider her application, she moved the high court in which a single judge issued a direction to reconsider her request based on the bona fide certificate issued by the college.
However, challenging the single judge order, the bank filed the present appeal before the bench. Counsel for the bank contended that the applicant had completed her course in 2015 and as such, the prayer in petition had become infructuous.
When the plea came up for hearing, the bench said: “The banks have no case that the education loan defaulters have contributed for the accumulation of the bad loans. We are informed that the cumulative total of more than 50 companies or groups each with over ₹250 crores of loan arrears, classified as wilful defaulters, works out to about ₹48,000 crore.”
Noting that the banks are reluctant to sanction education loan in the absence of sufficient collateral security, the court said education was notconsidered as an “asset” by banks. The country would be deprived of the service of scientists, doctors, engineers and other professionals, in case financial assistance is not given to the deserving students to come up in life. The educated youth are an asset to the nation and their talents can be utilized for the growth of the country. Banks must realise this fundamental fact.”
Holding that the appeal is nothing but an abuse of process of court, the bench then dismissed the bank’s plea and imposed an emplary cost of ₹25,000 on the bank, payable to the student within two weeks.
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