Agartala, Oct. 24: The State Bank of India (SBI) here has sparked a major controversy by engaging a private agency for realising bad debts.

The controversy has arisen at a time when the state government is exerting pressure on nationalised banks operating in Tripura to increase the credit:deposit (CD) ratio.

Burdened with NPAs to the tune of over Rs 119 crore, the SBI has taken the easy way out. However, the move has drawn flak from the state government and political parties.

?The wisdom ? or otherwise ? of the move will be judged only with hindsight. The private agency is likely to hire mafiosi elements or thugs and intimidate defaulters into repaying the outstanding loans,? an official source in the department of institutional finance said.

He added that the state government had enacted a piece of legislation, Public Demand Recovery Bill, in 2002 to facilitate recovery of bank loans through punitive measures and the SBI could utilise its provisions.

But Agartala SBI regional manager, Bimal Malakar, said the recovery rate of loans, between 10 to 12 per cent in Tripura, was one of the lowest in the country.

Dismissing fears of harassment of defaulters by mafiosi criminals, Malakar said the private agency entrusted with the task has been given clear guidelines on the modus operandi and directed not to resort to strong-arm tactics or illegal methods.