Online edition of India's National Newspaper
Saturday, Nov 01, 2003

About Us
Contact Us
Southern States
News: Front Page | National | Southern States | Other States | International | Opinion | Business | Sport | Miscellaneous |
Advts:
Classifieds | Employment | Obituary |

Southern States - Karnataka Printer Friendly Page   Send this Article to a Friend

KSFC to axe 300 jobs, plans revamp

By Our Staff Reporter

BANGALORE Oct. 31. The Karnataka State Financial Corporation (KSFC), the State Government, and the Small Industries Development Bank of India (SIDBI) today signed a tripartite memorandum of understanding to restructure KSFC's liabilities to SIDBI. The Government will stand in as guarantor, an official release said.

The KSFC has to now repay Rs. 900 crore to SIDBI over five years, at an interest rebate of 2 per cent on an unspecified going rate. The KSFC is also expected to reduce its NPA ratio from its current 52 per cent to less than 10 per cent in that time. The corporation's advances stand at around Rs. 1300 crore, sources said.

The KSFC will also have to cut its administrative costs to about 10 per cent of its income. The corporation will announce a VRS in about two weeks to cut its staff strength by 300, to about 1,000. A screening procedure will factor in both the age of the employee and his productivity for the VRS, sources said.

The exercise will cost Rs. 30 crore, but a lock-in component in the deal will ensure that the employee will be forced to invest half the money offered back in the corporation for a minimum of three years. The KSFC will pay the post office interest rate on the locked-in amount, the sources said.

In the long term, the KSFC would take up asset reconstruction for banks and other financial institutions for a fee. The corporation had in-house expertise in taking over defaulting companies at a corporate level, breaking them up, and selling the physical assets, the sources said.

The corporation also planned to offer universal banking services to the industrial sector. There was no plan to go retail, the sources said. As the rules governing State Financial Corporations prohibited them from starting banks of their own, the KSFC had approached regulators to relax the norms.

The KSFC was started with the aim of helping small and medium enterprises in the state. This year, the corporation would sanction about Rs. 450 crore to the SMEs, the release said.

The MoU was signed by M. Umesh, Managing Director, KSFC, N. Balasubramanian, Deputy Managing Director, SIDBI, and G. Gurucharan, Secretary, Budget and Resources, Department of Finance, Government of Karnataka.

Printer friendly page  
Send this article to Friends by E-Mail

Southern States

News: Front Page | National | Southern States | Other States | International | Opinion | Business | Sport | Miscellaneous |
Advts:
Classifieds | Employment | Obituary |


News Update


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |

Copyright 2003, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu