Chief Minister Pinarayi Vijayan has accused the Centre of choking State financial institutions such as the Kerala Financial Corporation (KFC) by denying them elbowroom to grow their businesses.

Vijayan said this while announcing the launch of KFC’s revised lending policy, new interest rate regime, and special schemes for start-ups. He went on to offer it due protection from the State government and support for the new initiatives.

Amended rules

The State Finance Corporation (SFC) Act that governed KFC and its ilk had not been amended for the past 18 years. Hence, they have not been able to mobilise deposits from the public or provide adequate working capital to entrepreneurs.

The higher lending limit for an individual continues to be ₹8 crore and for a company ₹20 crore. The Small Industries Development Bank was not refinancing KFC any more. The RBI had not permitted it to function as a small bank, Vijayan said. While non-performing assets of banks had been estimated at 15 per cent, it was only seven per cent for KFC. Still, the latter had not been granted the required operational freedom.

The Centre’s aim, the Chief Minister alleged, was to close down such institutions. This is why the state government intervened, and allocated ₹150 crore to KFC recently.

The Chief Minsiter patted KFC for its latest attempts to capture ‘new horizons’ by fixing a base interest rate of 9.5 per cent and a venture debt scheme for start-ups.

The initiative to provide loans within 30 days after a professional appraisal subject to assessment of the repayment capacity of the entrepreneur too is laudable, he said.

Finance Minister TM Thomas Isaac said on the occasion that the KFC would not only lend, but also monitor the functioning of loanee enterprises and even support them in the event of a crisis.

If the Centre failed to amend the SFC Act, the financial corporation would seek to function as a non-banking finance company. The competitive rates and schemes offered with the support of trained staff would help in no small measure, he said.

The Chief Minister gave away awards to successful entrepreneurs. Chief Secretary Paul Antony, Finance Secretary Manoj Joshi, and Sanjeev Kaushik, Chairman and Managing Director, KFC, were present.

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