Credit Worthiness - A true story to measure its importance

I was busy shuffling through the files of one of our clients, when a young man, who might have been in his late teens entered my cabin. From his dress I could guess that he was from a family which was not well off.

I asked him to take his seat and enquired him as to why he had come to the bank. He told me that he was pursuing his engineering in Electronics from ABC Engineering College. He wanted an education loan to finance his engineering.

I enquired about his rank in CET, and he replied that he had secured a free seat in the college after being ranked in the early 7000 in CET. He also told me that his yearly fees and expenses comes to Rs.17,500/- per year. I also enquired about his father, since it is a common practice amongst banks to check the credit worthiness of the father of the student, in case the student is incapable of repaying the loan after completing his studies. He told me that his father was a farmer, but there was something about he way he replied which did not convince me, however I gave him the required forms and asked him to proceed to the concerned department of the bank.

I got back to work and was immersed in it. After half an hour, when I took a look out of my cabin, I saw the same teenage boy walking out of the bank. I was curious to know what has happened, whether he had got the loan or not, so I asked our peon to get the boy.

His face wore a sad look as he entered my cabin, and he said that he had not got the loan. I asked for the reason for rejection. He said that his father lacked credit worthiness. When I asked him what farmer his father was, he told me that he had told me a lie, and that his father was a daily wage laborer.

I asked him why he had lied to me earlier and why he should be ashamed of his father’s job? I told him that it was due to the money that his father has earned over the years which had brought him so far.

I thought that a guy, who has done well in his 10th, 12th as well as CET under such circumstances would definitely study if he is given the opportunity. By not giving him the loan, I would be depriving him of that opportunity. Moreover no rule says that you should not give a loan to student whose father is not credit worthy. What is the use of education loan, if it cannot provide education to a needy fellow like the one sitting in front of me?

So I called up the concerned person and asked him to sanction the loan for the boy. At the end of it, I was left wondering as to what would have happened if he had not come to me in the beginning. He would have gone to the concerned department, and left without a word, after his application would have been cancelled.

A few days later, another person, in his early 50’s came to see me. It was also for an education loan, for his daughter. He was from a well to do family, and as it’s the practice, I asked him the rank of his daughter in CET.

He said that her rank was in the 45,000’s. As soon as I heard the number, I told him that our bank did not offer loans for students who secure a rank less than 10,000.

He was not amused and told me that there are rules in banks, which states that the bank should provide loans to the person who needs it. He also added that if he contacted the head office, then I would be forced to give the loan. I handed over the address of our head office, and asked him to meet me with the letter from the head office.

Both the incidents are as narrated to me by a relative, who works in a public sector bank and is the Chief Manager.