In order to support higher education of poor students, the Reserve Bank Friday asked banks not to reject any educational loan application, no matter if the residence of the borrower fell beyond the service area of the branch.
Issuing a notification for all banks, the master bank said that, "... 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."
This instruction of RBI has come in the response of various complaints from students, who stated that banks usually reject most application of the remote and rural areas student, stating that the residence of the application did not fall in respective bank’s branch service area.
Banks have been also asked to issue suitable instructions to their branches or controlling offices for meticulous and strict compliance in this regard.
The notification also added that the service area norms needed to be followed only in case of government sponsored schemes.
In the financial year ended 31 March, 2012, the gross credit towards education loan of banks was at Rs502 billion from Rs437 billion in the previous fiscal, as per the RBI data.
Meanwhile, the finance ministry today said it was in talks with the Reserve Bank on the issue of new banking licences.
--With Agencies Inputs--
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