It is reported that Reserve Bank of India has asked banks not to reject any educational loan application, even if the residence of the borrower does not fall under their service area.
ybrems (observations of this blogger)
This does not seem to make any sense. If the applicant's residence is close to the bank sanctioning the loan, it will be very convenient for him/her and their parents to provide all the required clarifications, certificates, and documents. Verification of the genuineness of the applicant's need, becomes easy. The Bank staff can also frequently call on the applicants and their parents to explain various schemes offered their bank, and also service the loan.
It should, therefore, be in the fitness of things, that the bank branch which is the nearest to the applicant's residence collects his application and supporting documents, make physical field level enquiries and forward the application to the sanctioning office and answer their queries. Both the branch field staff and the applicant, if necessary can visit the office of the sanctioning authority (presumably the Zonal Office / Regional Office of the Bank) and answer his questions about the feasibility, viability and the future prospects of the Course, College, University, and the Country which are key elements of an educational loan, apart from the background of the applicant and his parents.
The sanctioning office uses its specialised skills in assessing the technical merits of the application, while the applicant's banker (obviously nearest branch) should vouchsafe for his genuineness, end-use and repayment. They should also take care of the insurance policies obtained on the life of applicant by monitoring premia, they should ensure that collateral security obtained if any, is in tact, till the loan is repaid.
In other words, financial accountability and responsibility should be the burden of the applicant's banker. Technical whetting relating to University/college's genuineness, adherence to the norms of regulators like AICTE, MCI, passport and visa formality adherence, etc., should be the burden of the Sanctioning Office.
RBI seems to be under pressure from some VIP/VVIP to loosen prudence. Educational Loans Scheme can become a thunderous success only if they are sanctioned with due care and not in haste, because somebody is chasing or there is some quid pro quo. Timely sanction and urgency are important, no doubt, but, a loan is a financial arrangement, and not a dole.
If the Government wants to distribute doles, it can initiate free 100% scholarship schemes. If it wants to patronize only VIPs and their kith and kin, they can create special trusts and NGOs, to whom grants may be released. We should make swindling very easy.
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