THIRUVANANTHAPURAM: The most daunting task before the Kerala Financial Corporation (KFC) will be to rein in the gross non-performing assets (NPA), which had gone past 8 per cent in the last financial year.
Responding to the threat that the NPA poses to the company’s flexibility in raising funds from the market, the new chairman and managing director (CMD) of KFC, Sanjeev Kaushik (shown in the picture) asserted that the NPA issue would be addressed quite effectively soon.
There was a CAG observation that there existed regulatory constraint for KFC to raise public deposit until the corporation brought its gross NPA below 4 per cent. Two years back, the NPA position of KFC was much more worse – however, it has been improving steadily since then.
“By the current financial year-end, we will ensure that our gross NPA is contained within the four per cent levels. I know that our high cost of funds has been the real villain in our ‘lending game’ and this needs to be addressed on a war footing,” Kaushik, who has got varied exposure to the financial service industry of India said.
Corporation has been traditionally depending on bank refinance as source of funds. Stating that this was the reason why KFC’s cost of borrowings has mostly been higher, CMD said KFC is now looking beyond the present sources for mobilization of its funds, at sources like refinance schemes of Central agencies like India Infrastructure Finance Corporation Ltd (IIFCL), the dynamic domestic debt market, etc.
These efforts have started bearing fruit and the cost of funding has already started trending down. “Corporation is currently rated AA by two rating agencies approved by SEBI/RBI and with better financials, we expect a rating upgrade in the current financial year. Once our rating is upgraded, we will start tapping the bond market to bring our cost of borrowing further down,” he exuded confidence.
KFC wants to make sure that the benefit thus achieved would ultimately be passed on to its clients, and bring down the interest rates for the clients to much more competitive levels