Assessing Parent’s Financial Position Not Required for Education Loans, states Kerala High Court

The Kerala High Court recently held that repayment possibilities of education loans should not be assessed based on the financial position of the parents, but on the projected future earnings of the students on employment after education.
 
The judgment followed a writ petition filed by Devik Soniraj, a second-year BAMS student, challenging the decision of Bank of India that rejected her request for an educational loan. 
 
Devika had secured admission through the centralized allotment process of the State in 2019 on the basis of her rank in the National Eligibility Cum Entrance Test, 2019. She had paid the fees for the first year and for a portion of the second year, and had applied for a loan of Rs 7.50 lakh to pay the remaining fees. However, the bank turned down her loan request on the grounds that her father’s liabilities were not disclosed in her loan application.
 
Justice P.B Suresh Kumar while allowing the petition observed the revised guidance notes on Model Education Loan Scheme issued by the Indian Banks' Association in 2015 said that repayment possibilities of education loans under the scheme should not be assessed based on the financial position of the parents, but should be based on the projected future earnings of the students on employment after education.
 
Therefore, the liability of the parents shall not be an impediment for the bank in considering an application for an educational loan.
 

User

  Loading...
  Loading...

To continue


Please
Sign Up or Sign In
with

Email

We are listening!

Solve the equation and enter in the Captcha field.

Changes in Our Business Model
 
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • The investools will have to be reworked and will offer model portfolios. We will have to suspend the restructuring tool.
 
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
 
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
img
Debashis Basu
Founder