Reporting from DUBAI: Kerala State Power & Infrastructure Finance Corporation Ltd (KSPIFCL), a joint venture between the Kerala state government and the Kerala State Electricity Board Ltd (KSEBL), continues to remain as an active company.
But its recent financial disclosures and size of operations raise serious question: why maintain a lender that deploys very little capital, incurs recurring expenses, and offers limited visible value to the power sector it was created to support?
KSPIFCL’s mandate was simple enough when it was set up – provide financing support for power and infrastructure projects. Yet its recent activity suggests otherwise.
KSPIFCL disbursements have steadily declined in recent years, falling from around Rs117 crore in FY22 to just Rs42 crore in FY23, and just about Rs20 crore in the first nine months of FY24.
The company’s loan book as of December 2023 was only about Rs101 crore, and most of that exposure was to a single borrower. Its high capital adequacy ratio indicates a large capital base, but very little of that capital is actually deployed on the ground.
Even with this limited business volume, the corporation still carries all the overheads of a functioning financial institution – salaries, board-level governance, audits, statutory filings and compliance.
For a company handling such a small loan book, these expenses appear disproportionate. It also raises doubts about whether the organisation is still meaningfully functional beyond the statutory minimum required to keep it alive on the company register.
KIIFB, KSIDC, KFC can do the job
“What compounds the surprise is the existence of several other, far more active state-level financing agencies. Entities such as KIIFB, KSIDC and KFC already operate in overlapping areas,” said a former finance departmenrt official while talking to businessbenachmark.news from Thiruvanthapuram.
With multiple institutions handling power- and infrastructure-related finance in the state, the rationale for maintaining yet another corporation with minimal deployment becomes difficult to justify.
After analysing the filings and the company’s credit-rating records, a mild but unavoidable question emerges: if the purpose was to support Kerala’s infrastructure development, why keep capital idle and continue running an organisation that does so little with it?
The situation lends itself to the impression of a corporation operating along with a small loan book, large capital buffers and administrative expenses that seem out of proportion to actual work.
At a time when the state frequently cites funding constraints for power upgrades, transmission strengthening and infrastructure expansion, the presence of an underutilised lender adds to the inconsistency.
Policymakers may eventually need to re-examine whether KSPIFCL’s existence serves any meaningful policy or financial purpose – or whether its capital and functions are better aligned with another, more active institution.
