Bank cannot charge interest if education loan is paid before completion of course: Court

A resident of Ahmedabad filed a petition in high court after a bank refused to return his mortgaged documents even after he paid the entire education loan amount before completion of the course. In response to this, the bank cannot charge interest if education loan is paid before completion of course, the court ruled.

Ahmedabad: Anupam Uchit, a resident of Gujarat's Ahmedabad had filed a petition in the high court after the bank he took education loan from for his daughter's MBBS course, refused to return his mortgaged documents even after he paid the entire loan amount before completion of the course.

Ahmedabad Consumer Disputes Redressal Forum has ruled that banks cannot collect interest on education loan if the entire amount of loan is paid before the course is completed. The ruling was given in response to a petition filed by the father.

Anupam Uchit had taken an educational loan from a bank for his daughter’s MBBS course in 2011. Though the father had made full payment of the loan amount before the completion of the course, the bank had refused to return the property mortgage documents.

He then filed a petition before the Consumer Disputes Redressal Forum which ruled that the bank cannot charge interest on the loan and must return the mortgage documents and no dues certificate to the applicant.

Ahmedabad Consumer Disputes Redressal Forum ruled that since the father, had repaid the entire loan amount of Rs 10 lakh while his daughter was doing her internship, he was not required to pay the interest.

According to the rules governing the education loan, the payment of installment towards the loan amount should start only after the student completes her course. Since the applicant had repaid the loan amount before the completion of the internship he does not have to pay any interest.

The father had repaid the entire loan amount of Rs 10 lakh on March 17, 2018, while the recovery was scheduled to start from March 21, 2018. The bank was to charge Rs 2.21 lakh towards interest.