Banks cannot deny educational loans to eligible candidates on the sole ground that one of their parents, who are often included as co-applicants, had availed a loan for business or agricultural purpose and had not repaid it, the Madras High Court Bench here has ruled.

Justice R. Sudhakar allowed two writ petitions by daily wage labourers stating that a nationalised bank had refused educational loan to their daughters, who wanted to undergo teacher training course, on the ground that the petitioners had not repaid personal loans.

The judge recalled that while dealing with a similar case in the Principal Seat of the High Court in Chennai on October 28 last, he had pointed out that the scheme for providing educational loan does not state that parents' failure to pay loan taken by them would disentitle their wards from availing educational loan.

Pointing out that the scheme required banks to obtain declarations or affidavits from the applicants confirming that they had not availed loans from other banks, the judge said that the purport of that clause was to ensure that students did not avail educational loan from different banks.

“This should not be confused with the loan availed by the father from a bank for his business purpose.

The education loan and commercial loan are independent of each other and operate on different parameter and terms.

“The educational loan scheme is intended to improve the human capital of the nation and banks are given a role in the development of the human resources of our country. If the bank adopts a narrow interpretation, it will be retrograde and go against the State's endeavour to promote education.”

Emphasising the role to be played by bank managers in rural areas in promoting the scheme, the judge said that the chairmen of all nationalised banks should instruct their bank managers to adopt a customer friendly approach to promote the cause of education and nation building.

“The education loan should not be denied on hyper technicalities. The authority should not forget that it is because of education that he is holding the post of Manager. The educated youth are the bulwark of the nation. They are the building blocks of the nation.”