Bank can't deny educational loan for the reason of area location

Reserve bank of India issued a note to banks telling them that banks can not deny for educational loans to the borrowers with the fact that the borrowers area is not falling in the area of residence of borrowers. RBI issued a note to the banks about this issue. Full note is as under.


RBI/2012-13/291
RPCD.MSME&NFS.BC.No. 46/06.12.05/2012-13
November 9, 2012
The Chairman / Managing Director
All Scheduled Commercial Banks

Madam/Dear Sir,

Service Area Approach - Educational Loan Scheme
We have been receiving a number of complaints where students have been refused educational loan as the residence of the borrower does not fall under the bank's service area. In this connection, we advise that Service area norms are to be followed only in the case of Government sponsored schemes as advised in our circular RPCD.LBS (SAA).BC.No.62/08.01.00/2004-05 dated December 8, 2004 and are not applicable to sanction of educational loans.

2. Hence, banks are advised not to reject any educational loan application for reasons that the residence of the borrower does not fall under the bank's service area.

3. You are, therefore requested to issue suitable instructions to your branches / controlling offices for meticulous and strict compliance in this regard.

4. Please acknowledge receipt.
Yours faithfully,
(C. D. Srinivasan)
Chief General Manager
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