Kerala Financial Corporation has recorded an all-time high portfolio of ₹4,700 crore for the year ending March 31, 2021, provisional figures for which show a jump in the size by ₹1,349 crore over the ₹3,351 crore of the previous year with the company riding on a significant increase in loan approvals and repayments.
Tomin J Thachankari, Chairman and Managing Director (CMD), said that 2020-21 saw loan approvals alone worth ₹4,139 crore. This is an improvement of 244 per cent over the ₹1,659 crore of the previous year. Loan disbursements also kept pace and rose 258 per cent to ₹3,729 crore from ₹1,447 crore.
The base lending interest rate stands reduced to eight per cent since the Corporation was able to raise funds for as low as 6.5 per cent. Tomin Thachankari said that the Corporation expects a better net profit than the previous year owing to the better performance and reduced costs.
Better net profit expected
Thanks to its high capital adequacy ratio and low NPA, the Corporation had on January 1, 2021, reduced the base rate from nine per cent to eight per cent. It also drew advantage by the lower cost of funds. In this way, concessions received due to better performance have been passed on to customers.
The Corporation has decided to adopt Finacle, one of the leading core banking software, in view of its growth and technical requirements for future projects. Finacle will be operational soon, Thachankari said. The Corporation is also introducing debit cards in collaboration with public sector banks.
These debit cards can be used to transact all business as any regular debit cards, including in ATMs, POS machines and for online transactions and linked to the company’s mobile app to make high volume transactions. This is the first time in the state that a government institution is launching debit cards.
Finacle adopted, debit cards soon
The company website has been revamped and all loan applications are now accepted online. High speed one-to-one internet and video conferencing system has been implemented in branches. This has expedited the procedures overall and communication between branches and the head office. Repayments to special schemes are now made on a daily or weekly basis for convenience for which POS and Google Pay are employed.
Even during the pandemic-related crisis, repayments increased by 262 per cent from ₹1,082 crore to ₹2,833 crore. Interest income rose 131 per cent to ₹436 crore (₹334 crore). This was facilitated in part by the sharing of defaulters’ information to CIBIL and tightening of recovery procedures, he added.
Sharing of defaulter data
There has been a significant increase in repayment after information on defaulters was shared. About 24,000 records have been uploaded so far, Tomin Thachankari said. Among the financial institutions under the State government, Kerala Financial Corporation is the first to share defaulter data in this manner. Data is also being shared with other credit bureaus like Equifax, Experian and CRIF Highmark.
The Corporation has taken a soft approach to customers who are struggling due to the pandemic. Still, it has acted strictly with those who have deliberately defaulted on repayments. SARFAESI procedures have been expedited and resolution agents have been empanelled for this purpose. Units acquired are put up for sale through e-auction and a special loan scheme has been introduced for the purchasers.
Aim is complete overhaul
“Our goal for the year was a complete overhaul of the Corporation. More than just being an ordinary financial institution, we have remodelled it to one that offers customised loans and exemplary services to varied business sectors,” Thachankari said. Centralisation of the credit process and provision of an opportunity for clients to interact directly with top officials, including the CMD, have helped.
The Corporation has empanelled more agencies for customer verification, project report preparation and technical valuation to expedite loan processing. New loan proposals are directly analysed by the head office officials in the presence of the clients, Tomin Thachankari said.
Various loan schemes
The Corporation has sanctioned new loans of ₹256 crore to 419 industries struggling from the Covid-19 crisis. Furthermore, 1,937 new ventures were granted assistance under the Entrepreneurship Development Scheme. Loans up to ₹1 lakh were provided under this scheme without any collateral.
It also introduced various schemes providing assistance without any collateral requirement. This included schemes for startups, loans for electric vehicles, loans for converting buses to CNG, special loans up to ₹50 lakh to hotels and the facility of discounting bills for government contractors.
A special loan scheme for units affected by the pandemic is another. Loans amounting to ₹256 crore were sanctioned to 419 existing and new ventures under the scheme. It granted a moratorium to all units during lockdown. Special schemes are available for units engaged in the manufacture of masks and sanitisers.
Entrepreneurship development
The Entrepreneurship Development Scheme itself saw 1,937 new ventures being granted assistance. Loans up to ₹1 lakh were given to them without any collateral under which special preference was given to women and persons with disabilities, the CMD said.
Loans up to ₹50 lakh were offered at seven per cent under liberal terms and conditions. For non-residents returning home after losing jobs due to the pandemic, the scheme was offered at an interest rate of four per cent in association with the concerned department (NORKA).
Credit approvals for start-ups
Credit approvals were issued to 10 new startups during the year without any collateral security. A new scheme offered to fund up to 80 per cent of the work order received by the startups up to a maximum of ₹10 crore at an attractive 10 per cent. Similarly, the Corporation is providing up to ₹1 crore for the expansion of innovative prototypes in line with the development goals of the State government.
A special bill discounting scheme has been extended to government contractors to discount their bills without any collateral. The Corporation is also providing unsecured loans for converting buses to CNG and for purchasing electric vehicles. Special loans of up to ₹50 lakh were introduced to revive the tourism sector. Such loans are extended to hotels on a daily repayment basis with no collateral.
Bonds carry ‘AA’ rating
The Corporation has issued bonds of ₹250 crore during the year at an all-time best rate any state financial institution has managed so far, the CMD said. The strong financial base has helped it to get better rates than even major public sector banks. The bonds with ‘AA’ rating have a tenure of 10 years.
To keep the expenditures in check, strict controls have been introduced and all payments are now made directly from the head office. Avoidable telephone and internet connections incurring high costs are now disconnected. Old vehicles have been auctioned and vehicles are now rented for office use. These measures have helped in reducing the operational costs by 10 per cent, Thachankari said.
More women have been appointed to key positions to further the mission of women empowerment. The Corporation has also launched a platform for its employees to interact with business leaders to improve industry knowledge. Among notable business leaders featured are MA Yusuf Ali, Ravi Pillai, Azad Moopan and Kochouseph Chittilappilly.