Revenue recovery proceedings initiated against 125 units for Rs298.73 cr
CL Jose
THIRUVANANTHAPURAM: Kerala Financial Corporation (KFC), the 99 per cent Kerala Government owned non-bank finance Company (NBFC), seems to have started putting its foot down on the delinquent borrowers.
During the year (FY24) the KFC (Corporation) has initiated revenue recovery action against 125 units for an amount of Rs298.73 crore.
The Corporation has taken physical possession of four units with principal outstanding of Rs23.39 crore under SARFAESI during the year.
(SARFAESI stands for Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002)
Further, the Corporation has filed an Insolvency Petition under the Insolvency and Bankruptcy Code (IBC), 2016, against one unit for a claim of Rs27.39 crore.
There are five other units financed by the Corporation and undergoing the process of Corporate Insolvency Resolution Process (CIRP)/Liquidation on the basis of petitions filed by the other financial creditors. The total claim admitted in favour of the Corporation in such cases amounts to Rs18.02 crore.
The total recovery during the financial year (FY24) was to the tune of Rs3,901.10 crore against Rs2,332.42 crore during the previous year.
NPA stays low
The Corporation’s non-performing assets (NPAs) have improved over the last year,. While the gross NPA stands at 2.88 per cent, the net NPA has fallen to 0.68 per cent as of March 31, 2024.
Write-off
During the financial year 2023-24 (FY24) alone, the Corporation has written off 663 loan accounts amounting to Rs133.01 crore as bad debts (technical write-offs) against 508 accounts amounting to Rs104.95 crore in the previous year.
However, KFC stated that constructive steps have been initiated for the recovery of these accounts, and the amounts once recovered will go to the profit and loss (P&L) statement as revenue.
Large borrowings
For KFC, which has borrowed heavily (with a leverage ratio close to 7), it has to cover its back to avoid facing an asset-liability mismatch. The Corporation has availed Rs2,160.04 crore as term loan/working capital demand loan/foreign currency loan from various commercial banks/financial institutions and repaid Rs1,491.32 crore during FY 2023-24.
The aggregate outstanding line of credit (LOC) from banks and other financial institutions at the year-end was Rs5,737.13 crore. During the year, the board of the Corporation in its meeting held on September 21, 2023, approved a revised Loan Compromise Settlement Policy (LCSP) to settle NPA loans.
The next test before KFC is about how far the corporation can rely on state government guarantee that has backed certain large loans KFC has disbursed to government related entities.
The KFC document shows that the corporation has extended loans (currently) amounting to Rs2741.35 crore to public sector undertakings (PSUs) of the Government of Kerala.
The interesting part is that these loans are secured only by the sovereign guarantee of the Government of Kerala (GoK) and does not have any security.
