Education Loan Denied on Credit History Problems

A reader of our site has written to us that he was denied an educational loan for his son’s higher studies due to his below average credit history [His history is not bad, but is below average].

Reader Writes,

I applied for education loan for my son for admission to engineering college . Loan was applied with State Bank of India main branch ,LUCKNOW. The loan was declined for reasons that overdue outstanding on my 5 credit cards for Rs 58,889. Sir on my asking to give the bifurcation they said that CIBIL does not give the details, later on my own calculations i cleared and paid Rs 73,850 on my 5 credit cars.

Can now the loan be sanctioned. Secondly on one hand the RBI says that credit card companies are charging exorbitant interest rates and on the other hand loan like education loan is being rejected for dues on fathers credit cards. Kindly advise me as to where i should approach for clearing the education loan for my son., to also inform you that the credit cards payments were with held by me because my utmost priorty was to get admission and pay the requisite fee in time. Looking forward for a help in this regard.

Our Response:
Since you have already cleared the dues on your credit card, you should look forward for a positive response from SBI. The Finance Minister has already made it clear that PSU banks cannot deny education loan to students. The ministry has also cleared the ambiguity on certain clauses like the loan should be applied in the same district where the student and the guarantor are residents of – Finance Ministry has said that this is impractical.

A senior officer of joint secretary rank has been appointed to look into all education loan-related grievances which are addressed to the finance minister or the ministry.

Kindly re-apply with your bank showing all documents that you have paid off your credit card debt and also mention to them that PSU banks cannot deny educational loans as per finance ministry directive.[PDF] Give them 8 working days time. If they fail to respond, take up the matter with Finance Ministry with CC to SBI GM Lucknow and SBI Headquarters, Mumbai.

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