State Bank of Travancore (SBT) has said that by assigning bad education loan accounts to the ARC, it has only transferred the debt. The ARC can only follow lawfully permitted recovery measures stipulated by RBI, a bank spokesman said here.

The bank has assigned large corporate stressed accounts also to ARCs and till date it has not come across any complaints about the latter adopting unorthodox/unlawful methods in recovery, the spokesman added.

Assigned loans The bank has identified for assigning to ARCs 8,430 education loan accounts all over the country of ₹4 lakh and below having turned bad as on March 31, 2015. These have an average age of 10 years and are not fully secured where the chances for of recovery seemed remote.

In this manner, education loans with a book balance of ₹128.37 crore have been assigned based on a bidding process to Reliance ARC on June 27.

The offer amount was ₹61.94 crore (on 15:85 cash/ security basis) which worked out to over 48 per cent of the book balance.

Of these, 7,674 accounts are more than three-years-old as an NPA and 756, two-years-old. Only 5.70 per cent of the total has been assigned, which amounts to 24.58 per cent of the stressed portfolio.

Bank’s share SBT has a 20.48 per cent share of the education loan portfolio that 48 banks have built up in the State as on March 2015. It consists of 90,502 accounts with a book balance of ₹2,252 crore as on June 30, 2015. Of this, 27,251 accounts with a book balance of ₹522.27 crore are stressed.

In cases where accounts have turned bad, there are established means to settle them through compromise/one-time settlement. The bank has settled all cases where the borrowers have volunteered.

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