MSMEs to benefit from KFC’s rate cut

New interest rates will be applicale from next month

THIRUVANANTHAPURAM: The Kerala Financial Corporation (KFC) is slowly evolving as a true business-friendly industrial financing institution, and this time, the corporation has proved its commitment towards the state’s economic growth by slashing its interest rates by 1 per cent for manufacturing and services sector loans.

The revised rates will be applicable for new customers from coming December and for the existing base rate customers, the rates will be applicable from their next reset dates.

KFC’s top official said this was the biggest cut in interest rates by KFC and is an excellent opportunity, especially for units in MSME sector, to make good use of this reduced rates. He said the interest reduction will benefit thousands of manufacturing, industrial and service sector units of the state.

“The Corporation has been able to reduce its cost of fund by mobilizing low cost funds from the market, financial institutions and banks, and the benefit is being passed on to the customers,” said Sanjeev Kaushik (seen in the picture), the chairman and managing director of the Corporation.

Currently, KFC’s loans are linked to base rate of 9.5 per cent and each loan is placed in one of the seven bands of interest structure based on their credit rating.

Despite the presence of a base rate system, some of KFC customers have not been benefitted under this system because of the higher spreads. Moreover, some customers following the prime lending rate (PLR) regime have not yet switched over to the base rate system as they don’t stand to get the interest benefit even if they opted for the new base rate system.

A KFC statement said that the interest rate structure has now been simplified by reducing the number of bands from seven to five. In fact, the rates for service sector used to be 0.5 per cent higher than that charged on manufacturing sector.

“In the revised system, the rates for manufacturing and service sectors loans are merged and hence the service sector customers will get a higher benefit up to 1 per cent reduction in interest rates. Since the bands are merged, many of the manufacturing sector loans will also get the benefit of up to 0.5 per cent”, added Kaushik.

Ever since KFC has revamped its credit procedures and moved to the base rate system, the corporation has been receiving increased number of loan proposals – in excess of Rs1000 crore, of which maximum proposals are from service sector.



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