THIRUVANANTHAPURAM: In a setback to the state government, the Union Finance Ministry has informed it that the State Bank of Travancore (SBT) has autonomy, and that recovery of bad loans was part of the bank’s day-to-day activity.
Chief Minister Oommen Chandy informed the Assembly of the Finance Ministry’s reply to its protest over SBT entrusting the Reliance Asset Reconstruction Company with the recovery of student loan NPAs.
“The state government does not agree with this stand. What is needed is an approach with a social outlook,” Chandy said, after the issue was raised in the House through a submission by E S Bijimol MLA.
Chandy said the government would continue to take up the issue in all available forums.
After the SBT hired Reliance ARC for the recovery procedure, the state government had protested to the Reserve Bank of India (RBI) as well as the Union Government. On July 29, the Kerala Assembly passed a resolution against the bank’s policy and the government had written to the Union Finance Ministry conveying its protest.
As per the SBT’s agreement with Reliance ARC, the latter would recover loans up to `4 lakh in the student loan segment that could not be realised during the past three years.
According to a reply given by the Chief Minister in the Assembly on November 30, Reliance ARC had launched recovery procedures by contacting debtors over phone or meeting them in person.
As many as 2,800 persons were contacted over phone and Reliance ARC officials visited about 1,000, Chandy had said.
Education of children poses the biggest challenge to families in the state today.
In the matter of loan repayment, the bank should have taken a more lenient stand, Chandy said on Wednesday, adding that the government was opposed to the bank’s policy.