The Hindu : Business : SFCs to seek package for recapitalisation

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Friday, Jan 18, 2008
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SFCs to seek package for recapitalisation

Staff Reporter

One-time settlement for defaulters

SFCs need to play a greater role
Face competition from SIDBI

KOCHI: Finance Minister T. M. Thomas Isaac has said that the State government will request the Union government to provide a package for revitalising the State financial corporations (SFCs), which require recapitalisation in the current financial scenario.

He was talking to mediapersons after inaugurating a seminar on the ‘role of SFCs in the emerging business opportunities and mobilisation of resources’ organised by the Kerala Financial Corporation here on Thursday.

Funds had been allotted by the Union government towards recapitalisation of banks.

A similar action would be required in the case of the SFCs also. Several States had initiated programmes for revitalising the SFCs and the State government would examine whether those initiatives could be launched in Kerala too.

The State government would forward the suggestions emerging out of the seminar to the Union government, the Minister said.

The Reserve Bank of India did not permit the SFCs to take deposits from the public. They were facing competition from SIDBI as the latter was giving loans directly.

Mr. Isaac said the SFCs needed to play a greater role and efforts were needed to strengthen them.

A one-time settlement had been announced for defaulters who had taken loans from the Kerala SFC.

The offer would close on March 31. More than 200 SSI units had already utilised the opportunity and the corporation had allowed exemptions exceeding Rs.50 crore.

To revamp SFC board

The government was keen on revamping the director board of the Kerala SFC with professionals. Steps would also be taken to reorient the staff.

Allocation of funds

The Minister promised to allocate funds for the SFC in the forthcoming budget.

Earlier, inaugurating the seminar, the Minister said the State government would urge the Union government to raise the rate of interest for deposits under the National Savings Scheme to attract more investment.

The Minister pointed out that the State finance ministers had to function within the limitations imposed by the rules framed by the Union government.

K.K. Mudgil, Secretary-General, Council of State Industrial Development and Investment Corporations of India, said the SFCs were facing stiff competition from SIDBI.

P.T. Nandakumar, Managing Director of KFC, and others spoke.

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