THIRUVANANTHAPURAM: The settlement adalat for loan defaulters announced by the Kerala Financial Corporation (KFC) will be crucial to the KFC’s plan to reposition itself in the lending market.The offer has drawn an encouraging response with some 401 applications received till Saturday. A retired district judge will preside over the adalat scheduled for May 8. KFC CMD Sanjeev Kaushik said the adalat will help the corporation to clean up its balance sheet.
“The KFC is headed for a major makeover and we do not want bad loans to stress our balance sheet. A liberal settlement scheme has been worked out to clear the maximum number of cases,” he told Express.
The KFC has an NPA of `700 crore from 2,000 accounts. Of these, 150 have been categorised as sub-standard and 1,850 as doubtful. Thiruvananthapuram district tops the list of defaulters with NPA of about Rs 400 crore. Recently, the corporation had adopted a base rate system of 9.50 per cent over the previous prime lending rate of 14.50 per cent.
According to Kaushik, the rate revision will affect the profit for the next couple of years. “But in the long-term, this will help in attracting quality clientele and thus will prove a sustainable development model,” he said.A clean up of the balance sheet, according to the corporation, will help in securing low-cost funds. “We are in the process of reducing cost of borrowing by availing low-cost funds. Already we’d availed Rs 200 crore from the IIFCL and Rs 250 crore from bond markets. These funds will be used for closing high-cost funds. When the cost of funds are reduced, the lending rates too can be brought down,” he said.
The KFC is eyeing disbursal of Rs 1,200 crore in the 2018-19 fiscal with special focus on startups.
Sector-wise break-up of KFC loanees
Tourism: 25 per cent
Real estate: 10 per cent
Construction materials: 10 per cent
Shopping complexes: 10 per cent
Hospitals: 5 per cent
Others: 40 per cent