Here's how banks can goof up with your education loan

“Education is the most powerful weapon which you can use to change the world,” Nelson Mandela once said.But more often that not, good education comes with a high cost, especially if it is higher education. And this means, you land up availing an education loan. But did you know, that there is a good possibility that your bank could goof up your education loan. Can’t imagine? Then, read on.

Picture this:

You get admission in an institution of your choice, now the only thing that’s coming in your way is the fee for the course. You decide to apply for an education loan, and do all the necessary paperwork, and hope that the loan would be disbursed soon. The bank informs you that your education loan has been sanctioned and that it would be disbursed soon. So you wait, and wait a bit longer, hoping for the bank to disburse the loan. But even after six months the bank fails to disburse the education loan promised to you. Finally, you decide to make alternate arrangement for the fees, after all you didn’t want to lose the seat.

[caption id=“attachment_1147661” align=“alignleft” width=“380”]  Did you know, that there is a good possibility that your bank could goof up your education loan.[/caption]

This happened for real:

If you thought this is an imaginary situation, it is not. This happened for real and is cited in an RBI document. After several requests to the bank to reverse the transaction it fell on deaf ears and the customer finally approached the banking ombudsman (BO). The ombudsman investigated the matter and the bank contended that it did not disburse the loan since the customer had failed to deposit the margin money. But, as per the bank’s policy since the loan amount was up to Rs 4 lakh, she was not supposed to deposit any margin money at all. “Depriving a customer of loan against bank’s own administrative instructions was deficiency in service and accordingly the bank was directed to disburse the loan immediately to the complainant without insisting on margin money. The bank was also directed to pay Rs 10,000 to compensate the complainant towards expenses incurred for arranging loan from the alternate source and also for pursuing the case with the bank and OBO,” the RBI document said.

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What we can learn: Clearly the bank goofed up in this case. The truth is that not much can be done by the customer when it comes to any kind of loan. The best you could do is ensure you make arrangement for any margin money if there is any to avail the loan. Though in this case, there was no requirement from the bank’s side for such deposit. It’s good to know about the process of application and ask the bank for tentative timeline of the loan disbursement process, so that way you will know that your bank isn’t taking you for a ride.