HC issues notices in plea against State Bank of Travancore merger
31 August 2016
The Kerala High Court has issued notices to the Union finance ministry, the Reserve Bank of India, State Bank of India, State Bank of Travancore and the state government on a petition filed against the move to acquire SBT by SBI.
A division bench of acting Chief Justice Mohan M Shantanagoudar and Justice K T Sankaran issued the notices after admitting a plea filed by petitioners including 'Save SBT Forum' and others who alleged that attempts were made in camera without the knowledge of the directors and the state government for the proposed acquisition.
"Suspiciously, a bank working on profit for the past 70 years was all of a sudden showed as making a loss by charging higher rate of provision on standard, sub-standard and non-performing assets," the petition said.
"Without placing the subject matter of acquisition in the board meeting with prior circulation of the details to the directors, they have placed it as a 'table item' and initiated steps for acquisition, against the opposition of the directors representing the stakeholders and employees," it said.
It was done with a view to strengthening SBI India, the petitioners submitted.
Similarly, the SBI's board of directors decided against the wishes of the various stakeholders to continue the steps for acquisition, the petition said.
It said that the state assembly passed a unanimous resolution protesting the step for acquisition. Petitions and representations were made to the Centre, RBI and SBI, it said.
The Save SBT Forum includes political parties and central trade unions.
According to the plea, the petitioners apprehended that huge money available with the SBT will be diverted by State Bank of India for advancing loans for multinationals and corporate institutions, without investing it in the state from where funds are procured.
The petition said, "The state government has got heavy interest in the running of State Bank of Travancore as all the major business in the state is carried out by the bank established by Maharaja of Travancore in 1945 and thereafter nationalised."
The petitioners said the total business of the SBT, an associate bank of the SBI, stood at Rs1,68,123 crore as on 31 March this year. The bank grew by 31.06 per cent in 2015-2016, it added.