KOCHI: Only time will tell whether the much-touted bid to mobilise Rs 12,000 crore through NRI chit funds of the Kerala State Financial Enterprises (KSFE) for infrastructure projects will bear fruit. The budget targets one lakh NRI subscribers in this scheme slated to begin in June.
But experts doubt whether the government can use the entire amount as KSFE is entitled to five per cent commission. This works out to Rs 600 crore. Most of the NRIs are in the Gulf countries facing economic slowdown. This also raises doubts on the plan’s feasibility.
“The idea to collect Rs 12,000 crore through NRI chit funds is very shallow because of the Gulf crisis,” said Geojit Financial Services investment strategist V K Vijayakumar.
“If one lakh NRIs join this fund, the entire money cannot be used by the state. It has to be returned to subscribers and returns from infrastructure investment are not that fast. KSFE will only get a commission for running this scheme.” KSFE runs funds worth Rs 18,000 crore annually with a growth rate of 25 per cent. It has a customer base of 33 lakh.
With the new announcement, it will have to raise funds amounting to 67 per cent more than its corpus. As the duration of an NRI fund is between 24 and 30 months, the money will have to be returned soon. But KSFE chairman Peelipose Thomas is optimistic.
“NRIs can make their monthly remittance through any of the payment gateways. The entire remittance will be invested automatically in NRI bonds of Kerala Infrastructure Investment Fund Board (KIIFB) in the name of KSFE as and when the money is remitted,” he said.
“There will be a call option available for KSFE for withdrawing the amount at the time the subscriber gets the bid or when withdrawing the deposited amount. The balance free float will remain in KIIFB bonds,” he said. Thomas said KSFE has deposited Rs 3,750 crore in the treasury as security.