Thiruvananthapuram: State Bank of Travancore has clarified that it has assigned Reliance ARC (Asset Reconstruction Company) the sale of only 8,430 accounts under NPA out of its total 90,502 education loan accounts.
An official release here on Monday pointed out that SBT’s market share in total exposure under the education loan portfolio alone, among 48 banks doing business in Kerala, as on March 2015 was 20.48 per cent.
Out of SBT’s education loan portfolio of 90,502 accounts with book balance of Rs 2, 252 crore as on June 30, 27,251 accounts with book balance of Rs 522.27 crore are stressed accounts.
In cases where accounts have turned non-performing asset (NPA) there are means to settle these accounts by compromise / one-time settlement and we have settled all cases wherever the borrowers came forward.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 permits assignment of financial assets by banks to securitisation companies/ asset reconstruction companies (SC/ ARCs) which have RBI’s certificate of registration.
Accordingly, SBT framed guidelines for identification and sale of NPAs as a strategy for reduction in stressed assets/NPAs.
With a view to offload some of our NPA accounts under retail segment, we identified 8,430 education loan accounts from all over the country, of Rs 4 lakh and below which were NPA as on May 31 for assigning to ARCs.
The education loan portfolio with an average age of 10 years and not fully secured, where the feasibility of recovery seemed bleak, was identified for sale.
We assigned education loans with book balance of Rs 128.37 crore only. Assets were assigned based on a bidding process to Reliance ARC on June 27.
The offer amount was Rs 61.94 crore (on 15: 85 cash/ security basis), which worked out to over 48 per cent of book balance.
Out of the accounts assigned, 7,674 accounts were more than three years old after turning NPA and 756 accounts 2 years old.
Out of the education loan portfolio, only 5.70 percent was assigned to ARCs. That comes to 24.58 per cent of SBT’s education loan stressed portfolio.
By assigning to ARC, SBT has transferred the debt. ARC can only follow lawfully permitted recovery measures stipulated by RBI.
We have assigned large corporate stressed accounts also to ARCs and till date we have not come across any complaints about ARCs adopting unorthodox/unlawful methods in recovery.
