THIRUVANANTHAPURAM: Kerala Financial Corporation (KFC) is implementing a three- pronged strategy to revive corporation’s lending business and to set its house in order, said its chairman and managing director (CMD).
With revised strategy in place, KFC is aiming to sanction Rs1200 crore loans in the current year. With sustained growth in the sanctioned amount, KFC is keen to double its loan portfolio in the next three years
The KFC CMD, Sanjeev Kaushik, said KFC was bringing down its interest rate structure from the existing 14.5 per cent primary lending rate (PLR) to a more competitive base rate of 9.5 per cent.
Stating that this would be tied to KFC’s cost of funds, which the corporation is trying to reduce by tapping into low cost refinancing and other market sources, Kaushik added that, “We are also building up KFC’s profile and focusing on marketing efforts so that we can attract good customers through our new schemes and competitive interest rates.”
The corporation aims to extend comprehensive services including term loan, working capital and special schemes that may be required for the benefit of the SME sector. The extent of financing is based on the type of the project and credit rating.
The schemes that are on offer include term loan facilities for industrial activities, working capital loan, revolving fund loan, schemes for financing construction activities & housing projects, short term loan scheme, receivable finance scheme, schemes for start-ups, to name a few.
The credit policy of the corporation has been revamped to streamline the process of sanctions and disbursement and complete it in a time-bound manner.
To ensure that financial assistance is judiciously provided, appraisal systems are being strengthened by centralizing the process at the Zonal Offices. Three Zonal Hubs have been formed manned by persons whose capability is proposed to be enhanced continuously through exposure, training and on-the-job evaluation.
“We will focus on selecting credit worthy projects, appraising their business prospects comprehensively and disbursing the loans in a milestone related methodology. Continuous monitoring of the assets will be rigorously done in order to maintain the quality of the loan assets,” the KFC CMD said.
The new KFC chief acknowledged that the quality of the loan portfolio can be maintained not only through selective lending to good businesses, but also by providing exit and settlement for defaulters.
The corporation’s settlement policies have been made more objective and scientific to enable this. Simultaneously, the process is being fast-tracked through exit campaigns or Adalaths at various places in the state throughout the year.
He said, to achieve this, the corporation’s settlement norms have been liberalized and focused effort has been initiated to give a one-time window for defaulters to exit from their loan liability. Thus, he said, the corporation will be able to bring its gross NPA below the level of 4 per cent by this year end.
As per the regulations, the corporation can sanction loans up to the size of 20 crore. KFC has sanctioned more than 2500 micro loans in the last five years. In the future, the corporation will be focusing more on micro, small and medium enterprises (MSME) sector, Start-ups and IT sector, he said.