Kerala Financial Corporation to get Rs200 cr fresh capital
THIRUVANANTHAPURAM: Kerala Government has big dreams for the Kerala Bank, whose fruition has been viewed as a prestige issue by the government, and Kerala Financial Corporation (KFC) that has made big leaps in the recent past in terms of loan disbursements as well as containing bad loans.
During his budget presentation on Friday, Dr Thomas Isaac (seen in the picture), the State Finance Minister, said while Kerala Bank’s business will be tripled in three years, the Government will infuse additional Rs200 crore share capital to KFC, which is 97.25 per cent owned by the Kerala government.
Briefing on the business plans for Kerala Bank, which has been established after a three-year-long political and legal battles involving all the 14 district cooperative banks (DCBs) and their political leaderships, Dr Isaac said the present business size of the bank will be increased substantially from Rs1 lakh crore.
“Our target is to attain a business of Rs3 lakh crore and 5000 touch points including primary co-operative societies,” Dr Isaac said. He said the merger of DCBs as per the statute has already been completed and that the software unification for products and services is progressing as per schedule.’
At the same time, KFC which has built a loan book in excess of Rs2685 crore as of March 31, 2019, is also readying itself for a capital boost in order to support a sustained growth going forward.
The Finance Minister said the government has plans to boost its capital base by adding another Rs200 crore to its share capital thus taking the total share capital to Rs426.50 crore (Share capital was Rs226.50 crore as of March end).
KFC had a total networth of Rs457.41 crore as FY19 end, working out a capital adequacy ratio of 19.24 per cent, which is far in excess of 9 per cent stipulated by RBI. The interesting part is that even with the given share capital and networth, KFC, which is the most efficient state financial corporation in the country, could more than double its loan book.’
The corporation, which used to be bogged down by its huge bad loans in the past, has come of age with a current gross NPA at 5.77 per cent. There were reports that KFC could approach RBI to seek permission to raise low-cost retail deposits from the market once its gross NPA falls below 4 per cent, which now seems quote achievable.’
Dr Isaac said, Kerala Bank, which is the second largest bank in the state now in terms of business size with Rs1 lakh crore is ideally placed to boost domestic investments within the state.
Dr Isaac assured that Kerala Bank will not loot the public and the practice of squeezing the public through exorbitant service charge, fees, penalty etc will not be followed by Kerala Bank.
“For providing all sorts of modern technological services to the public, our primary co-operative societies will be equipped through their apex banks by roping them into the core-banking system,” he added.