The Hindu Business Line : KSFC in talks with ARCIL to buy bad assets in Karnataka

THE Karnataka State Financial Corporation (KSFC) is in talks with Asset Reconstruction Company of India Ltd (ARCIL) to buy the bad assets in the State.

Addressing newspersons here on Thursday, Mr B.R. Jayaramaraje Urs, KSFC Managing Director, said ARCIL, which buys bad assets of banks, has such an agreement in 13 States. ARCIL, which gets stamp duty and registration duty exemptions in these States, wants similar exemption in Karnataka too.

If the talks materialise, KSFC will have to buy bad assets from ARCIL. Asked about the reasons for such a move by the corporation, Mr Urs said the corporation has experience in disposing of bad assets. "We have technical persons to carry out these exercises," he said, adding that the corporation can also earn a good commission from selling the bad assets.

NPAs, lending: To resolve issues related to NPAs, the corporation introduced an online one-time settlement scheme with effect from August 1. It also introduced a debt-restructuring scheme.

He said the lending policy of the corporation is being refined every year to make it more customer-friendly. In addition to this, the corporation has also reduced the rate of interest with effect from August 1.

Stating that more powers have been given to the branches and zonal offices to sanction loans, Mr Urs said loan proposals up to Rs 75 lakh are processed at the branches. The corporation also plans to further delegate powers of disbursement and recovery to concerned branches.

Insurance products: KSFC has partnered with Iffco-Tokyo to sell the latter's insurance products. The corporation, which sold insurance policies of the company to the tune of Rs 27 lakh in the last fiscal, has set a target of selling policies worth Rs 1 crore during the current fiscal, he said.

Profit centre: The corporation also plans to introduce the `profit centre' concept from the next financial year to boost its revenue.

Mr Urs said the corporation wants all its branches to make profits, and under this concept each branch will have to earn its revenue by itself. With this, only viable branches will be retained and unviable ones will be closed down. The `profit centre' concept will be introduced in 2005-06.

KSFC has 29 branches in Karnataka.

KSFC, which made a profit of Rs 2.74 crore during 2004-05, recovered an amount of Rs 582.17 crore. During 2004-05, the corporation set a target of disbursing loans to the tune of Rs 285 crore. It wants to recover Rs 550 crore during the year, said Mr Urs.

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