The Hindu : Business : Same recipe for State finance corporations

Online edition of India's National Newspaper
Wednesday, Nov 16, 2005

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Business

Same recipe for State finance corporations

Special Correspondent

Majority of SFCs turned sick

HYDERABAD: Union Finance Minister P. Chidambaram has asked State finance corporations (SFCs) to enter the capital markets in due course to raise their own resources.

Since the Government could no longer hold 100 per cent equity in SFCs, they should enter the markets to raise money and get themselves listed on the stock exchanges.

"Let the performance of the SFCs be judged by the market. The market will reward the good ones and punish the non-performers," he said.

Participating as chief guest at the golden jubilee celebrations of the Andhra Pradesh State Finance Corporation here on Tuesday, Mr. Chidambaram said ignoring the fundamental prudential principles, a majority of the 18 SFCs had run into huge losses and turned sick.

"What should the small and medium entrepreneurs do when the SFCs themselves turn sick,'' he said.

In, what he called, "plain speaking on the health of SFCs", he said that being the principal lenders to the small and medium enterprises sector, the State Financial Corporations ought to behave like lending institutions and recover dues, obtain rating and follow regulations.

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