The Reserve Bank of India (RBI) recently asked banks not to reject any educational loan application even if the residence of the borrower does not fall under their service area.
RBI said in a notification "... banks are advised not to reject any educational loan application for reasons that the residence of the borrower does not fall under the bank's service area"
RBI has also asked the banks to issue suitable instructions to their branches or / controlling offices for meticulous & strict compliance in this regard.
The apex bank RBI issued the notification in view of number of complaints where students were refused educational loan as the residence of the student does not fall under the bank's service area. It further said that the service area norms should be followed only in the cases of government sponsored schemes.
As per the RBI data, In the financial year ended March 31, 2012, banks' gross credit towards education loan was at. Rs. 50,200 Crore from Rs. 43,700 in the previous fiscal.
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