No service area approach for Education Loan - RBI

Friday, November 9, 2012

Reserve Bank of India has issued notification on 9th November 2012 as follows:

Quote

We have been receiving a number of complaints where students have been refused educational loan as the residence of the  borrower does not fall under the bank's service area. In this connection, we advise that Service area norms are to be followed only in the case of Government sponsored schemes as advised in our circular RPCD.LBS (SAA).BC.No.62/08.01.00/2004-05 dated December 8, 2004 and are not applicable to sanction of educational loans.  

2. Hence, 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. 

3. You are, therefore requested to issue suitable instructions to your branches / controlling offices for meticulous and strict compliance in this regard. 

unquote

Ref: http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/SAC091112CE.pdf

If the banks reject the education loan applications from students, quoting the 'service area concept', students can quote this circular.  If still the branch managers do not accept the application for processing, the students can complain to Reserve Bank of India through mail id cgmicrpcd@rbi.org.in or send a fax to RBI, Mumbai 91-22-22621011/ 22658273/ 22658276