RBI to banks: Don't deny education loans based on location

If you are a student, looking for an education loan, you have some good news. Well almost. The Reserve Bank of India (RBI) in it’s notification has warned banks to not reject education loans to students just because the student does not fall under the bank’s service area.

Why: Because RBI has been 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.

[caption id=“attachment_520941” align=“alignleft” width=“380”]  RBI has asked banks to issue suitable instructions to all their branches for meticulous and strict compliance of these guidelines. Reuters[/caption]

Exemption: However the central banks also clarified that the service area norms are to be followed by banks in case of Government sponsored schemes for education.

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What: RBI has asked banks to issue suitable instructions to all their branches for meticulous and strict compliance of these guidelines.

In mid August, Finance Minister, P Chidambaram had said to various Public Sector Banks, that education loan is a right of every student.

And, if any PSU banker was found rejecting a large number of education loan application, they could be penalised for rejecting the application.

Looks like, education loans norms are becoming student friendly, one step at a time.