Education loan cannot be rejected on account of low CIBIL score: Kerala high court

In a significant ruling, the Kerala High Court has declared that banks must not reject education loan applications solely due to a low CIBIL score. Justice PV  Kunhikrishnan emphasised the importance of adopting a compassionate approach when assessing such loan applications, recognising the role of students as future builders of the nation.

The court stated, "Students are the nation builders of tomorrow. They have to lead this country in the future. Simply because a student, who is an applicant for an education loan, has a low CIBIL score, I am of the considered opinion that the education loan application should not have been rejected by the bank," as reported by Livelaw.

The ruling was issued in response to a petition filed by Noel Paul Fredy from Aluva. Fredy had experienced repeated delays and non-approval of his loan application despite making multiple requests. The bank justified the delay by citing the low CIBIL score of the petitioner and his parents, which did not meet the prescribed requirement for approving educational loans.