Economy

Include State Finance Corporations in compound interest waiver scheme: Kerala FM

Our Bureau Thiruvananthapuram | Updated on December 01, 2020 Published on December 01, 2020

Kerala Finance Minister Thomas Isaac has expressed concern over the manner in which State Finance Corporations (SFCs) have been left out of the scheme for ex-gratia payment to borrowers of the difference between compound interest and simple interest for six months.

The scheme was thrown open to lending institutions with MSME-outstanding loan amounts of up to ₹2 crore to ensure business continuity amid the disruptive influence of the Covid-19 pandemic. All lending units — ranging from public sector and private banks, financial institutions and NBFCs — had been included in the laudable scheme, Isaac stated in a letter to Union Finance Minister Nirmala Sitharaman.

 

The apex Small Industries Development Bank of India (SIDBI) had originally directed the SFCs to credit the amount vide a letter dated November 2, but had withdrawn it later, stating that SFCs have been left out of the scheme.

Relief needed

Kerala Financial Corporation is an affected SFC, Isaac said in the letter, having been incorporated under the SFC Act of 1951 and with a proven track record. It has been engaged in the business of providing financial assistance to MSME units and, as on March 31, 2020, has a portfolio size of ₹3,370 crore with a gross NPA of 5.28 per cent and net NPA of 1.66 per cent.

Kerala Financial Corporation is also a public financial institution, and one of the select SFCs included as a member-lending institution by the Credit Guarantee Fund Trust for Micro and Small Enterprises, Isaac said. Its external rating is AA for issue of non-SLR bonds.

He requested that, in view of the consistent track record and healthy financials, the Union Finance Minister may intervene to include such SFCs in the scheme. “This would help them provide relief to MSME customers affected by the pandemic,” his letter said.

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Published on December 01, 2020
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