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Kerala Finance Minister Thomas Isaac has requested Union Finance Minister Nirmala Sitharaman to bring the better performing State Finance Corporations (SFCs) under the ambit of the Emergency Credit Line Guarantee Scheme (ECLGS).
The SMA-0/ SMA-1 (Special Mention Accounts) portfolio of the Kerala Financial Corporation (KFC) as on February 29 this year is ₹3,000 crore and, hence, the eligible credit under ECLGS would be ₹600 crore, Isaac wrote in a letter addressed to Sitharaman.
Special mention accounts
SMA-0 accounts pertain to those in which the principal or interest payment is not overdue for more than 30 days, but show signs of incipient stress. SMA-1 accounts are those where principal or interest payment is overdue between 31 to 60 days. In contrast, non-performing assets (NPAs) have a duration of 90 days.
“In view of KFC’s consistent track record and healthy financials, your kind intervention is requested to include it and similarly placed State Financial Corporations also in the scheme. This will help us in providing relief to MSME customers affected by the disruptions from Covid-19,” the letter said.
Isaac recalled that the ECLGS is aimed at connecting banks/ NBFCs/ financial institutions to ensure the continuity of business in the MSME units during the pandemic, which is most welcome. The Kerala government has been taking earnest efforts to coordinate the implementation of the scheme.
Special cell set up
It has set up a special cell at the Finance Department to coordinate the implementation of various Covid-19 relief packages declared by the Central and State government as well as related agencies. “But it has come to our notice that some of the better performing financial institutions are left out of ECLGS,” he said.
“KFC is a State Financial Corporation incorporated under State Financial Corporations' Act 1951, and extends finance to MSME units in Kerala. As per the provisional financials, the portfolio size of KFC is ₹3,370 crore; gross NPAs at 5.28 per cent; and net NPAs at 1.66 per cent as on March 31 this year.”
KFC is also a Public Financial Institution vide Central Government Notification SO 247(E) dated March 28, 1995, and is also one of the select SFCs included as ember lending institution by Credit Guarantee Fund Trust for Micro and Small Enterprises, the Minister said. The external rating of KFC is at AA, Isaac added.
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