THIRUVANANTHAPURAM: The Supreme Court verdict on April 1 sealing the fate of 1,956 bars and toddy shops along the highways in the state has added wrinkles to the foreheads of those who have extended financial support to liquor outlets. The Kerala Financial Corporation (KFC), a major lender in the state to this segment, expects 80 per cent borrowers to default on interest payment.
Out of the total 586 beer parlours that were functioning along the highways, KFC had disbursed loans worth `220 crore to around 150 parlours. “It is a major challenge ahead of the KFC. Some of the borrowers are going to be non performing assets,” said M G Rajamanickam, Managing Director, KFC.
Adding to KFC’s woes, 30 hotel ventures which availed loans from KFC remained only on papers. “Bar and beer parlour owners with other sources of income can easily pay instalments and many of them have a good land bank to lean on.
But the newcomers, who have invested a good chunk of their wealth in this segment, are affected,” said a beer and wine parlour owner. In a bid to hurdle over the crisis, KFC reworked its accounts providing liberal one-time settlement at 12 pc interest rate for NPAs and 50 pc of such units closed their accounts through this scheme.
This move had brought down the KFC’s non-performing assets to less than 10 pc last fiscal. But the trend may reverse this fiscal.
“We are awaiting a government policy on refinancing KFC for the loss it suffered. The other plan is to shift focus to areas such as startups and core industry segments,” said Rajamanickam.
“It is a big question as to what should be done with the loan repayment from April. Most of the loans have been taken from scheduled commercial banks like Federal Bank and public sector banks like SBI. We are hoping for a government move to save this industry from bankruptcy,” said D Rajkumar Unni, state president of the Kerala Bar Hotel Association.