Banks giving loans to some under political pressure: Madras High Court

Chennai: In an important verdict amid bank fraud cases rocking the country and embarrassing the Centre, the Madras high court said that banks were giving loans to several persons “under various political pressures” and those who default on repaying them flee from the country.

Rejecting petition of a girl student seeking educational loan, Justice S. Vaidyanathan has noted that whether the amount was small or huge, it needed to be recovered from defaulters. “Rather than running behind the defaulters, a loan can better be rejected at the threshold by identifying a person’s credentials.”

Upholding denial of educational loan by SBI, to the student for pursuing BSc Nursing Course, the judge said the bank was right in rejecting the petitioner’s loan application.

 He said, “Banks/financial Institutions are giving loan to several persons under various political pressures and ultimately public money is being misappropriated and defaulters flee from the country. Innocent employees, who are forced to sign the loan grant,  are ultimately taken to task.”

He said in this case, the bank has rightly done so, as the petitioner’s father has defaulted in paying several loans.

The judge’s observations comes when the country has been rocked by the Rs 13,000 crore Punjab National Bank fraud involving diamond trader Nirav Modi and the alleged default by liquor baron Vijay Mallya in paying loan of over Rs 9,000 crore to various banks.

 Petitioner submitted she belonged to a downtrodden community and had approached the SBI for an educational loan of Rs 3.40 lakh for pursuing B.Sc (Nursing) course. Though an application, along with relevant documents, was submitted, the bank refused to grant loan, saying the course does not come under Indian Banks Association’s (IBA) educational loan scheme and also that her father was a defaulter. And, several suits for recovery of loan amounts were pending against her father.