Thiruvananthapuram: Kerala Financial Corporation plans to double its loan portfolio from Rs 2,500 crore to Rs 5,000 crore by 2020.
“From now on, it is not profitability that will matter but the number of enterprises that are being given a helping hand,” finance minister Dr T M Thomas Isaac said, laying down the Corporation’s new philosophy here on Wednesday. The KFC also unveiled liberal loan packages for start-ups, too.
As part of expanding operations, the KFC will move from prime-rate to base rate lending rates. From a high of 14.5 percent, the KFC will now have competitive base rate of 9.5 percent. The new base rate will apply to old loans also. “This does not mean that there will be a dramatic five percent drop in interest rates,” Dr Isaac said.
“It is just the base rate and interest will be fixed according to the repayment capability of the entrepreneur. Nonetheless, the rates will come down by two to three percent,” Dr Isaac said. The normal practice for KFC was to provide money on the basis of collateral. From now on, it will be based on repayment capability. Also, the loans will be provided quickly, within 30 days.
The minister said that once KFC got rid of its non-performing assets, it would seek RBI’s approval to accept deposits. As it stands, the KFC cannot accept deposits as it has an NPA of above 7 percent. The liberal one-time-settlement carried out on May 8 was an attempt to clear the KFC’s balance sheet.
The Corporation has other handicaps, too. Chief Minister Pinarayi Vijayan, who inaugurated the KFC re-launch, said that the maximum the KFC could provide as loan to an individual was Rs 8 crore, and Rs 20 crore for a unit. “But once these units expand, they will not be able to depend on the KFC and will move on to other banks,” Mr Vijayan said.
Further, the Chief Minister said that the Centre was attempting to destroy state finance corporations. The Centre’s financial institution Small Industries Development Bank of India (SIDBI), he said, had stopped providing loans to state financial institutions like KFC. The finance minister said that the RBI had rejected the state's proposal to convert the KFC into a small bank....