It is unfortunate that the Kerala Assembly chose to pass a "unanimous" resolution condemning a commercial decision taken by State Bank of Travancore.(SBT).
The controversial issue is the decision taken by SBT to sell its overdue Education Loan portfolio to an Asset Reconstruction Company (ARC), which is purely out of commercial considerations. The ARC in question happens to be one promoted by Reliance group which has stirred the hornet's nest, it seems!
It is wrongly reported that SBT has engaged the Reliance Asset Reconstruction Company to recover the overdue loans and the company in turn is using high handed techniques for recovering. The fact of the matter may be SBT might have sold its overdue loan portfolio to ARC as permitted by RBI to cleanse its books of the overdue loans. This is also clearly mentioned in the loan agreements that "the bank may sell.assign.... the loan outstandings to another company as deemed fit, in future...." which has been agreed to by the borrowers while availing the loan.
Without realising the whole episode the 'honorable' members have jumped into a conclusion for passing the resolution. This may be due to two factors involved in the issue. The loan portfolio is that of Educational Loan and the ARC is manager by Reliance.
Had the borrowers chosen to repay the loan taken on time as agreed upon, the Bank would not have decided to sell the portfolio to the ARC. So the party to be blamed, if at all to be blamed, is the borrowers and not the Bank. If the government or the Assembly is so keen to avoid this, government could have taken a decision to take over the entire outstandings from the Bank, thus saving the situation.
I request the MLAs and the cabinet to take pains to study the entire issue and arrange to reverse a wrong decision taken by the House to put the matters straight
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