Better to reject the loan than to run after defaults: High Court of Madras

Chennai:

Important observations on cases of bank fraud that shake the country, the Madras High Court said yesterday that banks were lending to several people "under various political pressures ".

Judge S Vaidyanathan pointed out in her order that the petitioner aspired to a request for instructions to the State Bank of India for granting him an education loan after being refused by the bank at reason that his father was

Noting that if the amount was small or huge, it had to be recovered from the defaulters, the judge said in this case that the SBI was right to reject the petitioner's loan application.

"Banks / Financial Institutions provide loans to several people under various political pressures and, ultimately, public money is diverted and defaulters are fleeing the country." In the end, the granting of loan is taken apart, "he said in the order.

" Rather than running behind the defaulters, a loan may be better rejected at the threshold by identifying a person's credentials. " In this case, the bank rightly did so because the petitioner's father failed to repay several loans, "said Judge Vaidyanathan

.The judge's observations come at a time when the Country was shaken Bank fraud involving the diamond Nirav Modi and the alleged defect by the baron of alcohol Vijay Mallya to pay a loan of more than Rs 9,000 crore to various banks

The petitioner argued that she belonged to an oppressed community t had contacted the SBI for an educational loan of Rs 3.40 lakh to attend a nursing course BSC

The bank insisted that she bring the income certificate, the identity card, the proof address and other relevant documents for obtaining the loan.

the bank refused to grant a loan, claiming that the course did not fall under the education loan program of the Association of Indian Banks (IBA) and that his father was in failure to pay.

the bank argued that several claims for recovery of loan amounts were pending against the applicant's father