The borrowers affected by the deal say there were at least about 350 companies in the state whose loan cases had been sold out by ICICI bank to the KMB at a consideration of merely 2.05 per cent of the total value of the loans.

According to the borrowers, the total recoverable value of the loan cases sold to KMB amount to approximately Rs 1 lakh crore, including the principal amount and interest on it. However, they allege that these had been traded on a consideration of just 2.05 per cent of the total value.

In a case pertaining to 56 loan cases with a total principal amount of Rs 52.45 crore, the ICICI bank had sold it for Rs 12 crore although the total recoverable amount along with interest was over Rs 500 crore.

The Gujarat High Court, however, rejected the deal saying it was in clear violation of the provisions of the Banking Regulation Act of 1949, which permitted banks and financial institutions in mobilising funds for advancing loans but prohibited trading of debts.

According to Ashok Shah, who pleaded the borrowers’ case in the High Court, by entering into a deal trading debt, ICICI cleared its own NPAs and KMB swelled its assets value because NPA would not be reflected in its balance, as it had not advanced the loan. But the borrowers were the biggest losers because they were not consulted while selling their debts to KMB. Several borrowers said they wanted to settle their accounts by paying 10 to 20 per cent of the amount paid by KMB but they were not given a chance.

Manish Patel of Madhu Textiles told Newsline, “We have decided to set up a forum to put up a united fight against the KMB in the Supreme Court.” He said since the legal fight in the apex court was very costly and it was not possible just for a few borrowers to fight the banks, they will jointly defend their interests.

S K Gadhvi of Balaram Cements Limited said a meeting of several borrowers affected by the deal had been held nearly 10 days ago and decided to form a forum. “If the debt trading deal between ICICI and KMB are investigated properly, it may turn out to be a bigger financial scam than Satyam’s,” said Gadhvi.