Money & Banking

Kerala Financial Corporation to lend at 8%, the lowest ever

Our Bureau Thiruvananthapuram | Updated on January 01, 2021

Tomin J. Thachankary, CMD   -  The Hindu

Announces special loans of ₹1,600 crore to be disbursed in the next three months

The public sector Kerala Financial Corporation has introduced a major interest rate concession for entrepreneurs from the New Year, the latest initiative in a series of stimulus packages and confidence-building measures for the state’s industrial economy recovering from the disasters of year 2020.

New loans will be made available at a base rate of eight per cent, which is the lowest yet declared by the Corporation, an official spokesman said here. The Corporation has also announced that special loans of ₹1,600 crore would be disbursed during the next three months.

Special loans

No prior licences or permits are required in order to access the loans, the spokesman quoted Tomin J Thachankary, Chairman and Managing Director of the Corporation, as saying. The loan will be issued merely on the basis of a project report, and without detailed inspections. Applicants need to produce licences within a period of three years.

They would no longer have to appear in person at the office either, which would help prevent any delay in the issue of the loans. A quick decision would be made on the disbursal after applicants complete an interview with top officials of the Corporation at the headquarters via video conference.

Security reduced by half

The requirement of security, which used to be twice the amount of the loan, has been reduced to half now. For example, if the security requirement was ₹1 crore to take a contractor loan hitherto, it would be just ₹50 lakh now. No other financial institution is as generous, the spokesman quoted Thachankary as saying.

Entrepreneurs had been enjoying a facility to convert interest arrears into loans as part of Covid relief schemes. The one-time settlement that saw enhanced interest from entrepreneurs and increased repayments, ended on December 31 with recoveries of ₹150 crore. In addition, the Corporation has made a financial profit by disposing of 58 delinquent items it had attached.

Uploading of credit information

With details of defaulters being uploaded on the CIBIL database, recoveries have showed a sharp uptrend. Defaulter details are now being uploaded even in other credit information companies such as CRIF, Experian and Equifax as well. This would serve as a warning for those who do not pay up intentionally.

Meanwhile, loans of up to ₹5 lakh are available for old passenger buses for converting into CNG or electrical transmission depending on the number of cylinders. New rules require that buses plying in the cities of Thiruvananthapuram, Ernakulam and Kozhikode must convert, if older than 15 years. Repayments would need to be effected on a weekly basis.

According to the spokesman, the loan amount would be paid directly to the conversion company after receipt of fitness certificate from the State Department of Motor Vehicles. The scheme would benefit thousands of buses operating in the listed three main cities of the State, he added.

Published on January 01, 2021

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