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KFC top priority to cut NPAs to 40 pc

Mony K. Mathew

THIRUVANANTHAPURAM, June 15

AS part of its efforts to refurbish the balance sheet and ramp up the performance, the Kerala Financial Corporation (KFC) is giving top priority to reducing the non-performing assets (NPAs) level and improving the customer service.

The corporation has targeted to pare down the NPA from 56 per cent as of now to 40 per cent in the current year, according to Mr Subrata Biswas, Managing Director. While the provisioning for NPA was at Rs 29 crore in 2001-02, it came down to Rs 6 crore last year.

He told Business Line that KFC, which enjoyed a good credit rating, was in line to get a package from the Small Industries Development Bank of India (SIDBI). This would be in the form of a reduction in interest rates on future loans. The interest on outstanding loans was also likely to be brought down, he said and added that the package was being extended to only select State Financial Corporations (SFCs).

He said the corporation maintained a very good track record in repayments to IDBI and SIDBI. If required, it can go to the market or commercial banks to raise funds.

Last year, the tourism and hospitality sector got 45 per cent of the total sanctions made by the corporation. This included loans of up to 90 per cent extended for modernisation and expansion of hotels and resorts. A "revolving fund" was also devised to give short-term assistance to the clientele.

During the current year too, the tourism sector was expected to figure prominently in sanctions and disbursements. The corporation was also expecting good business from the infrastructure area where a number of projects were expected to come up, Mr Biswas said. To improve customer service, all the 16 branches of KFC would be made online in the current year and IDBI-INTECH would supply the software required for the purpose. Besides, the procedures would be simplified to ensure that the appraisals were completed within 30 days, he said.

In 2002-03, the sanctions and disbursals were to the tune of Rs 157 crore and Rs 112 crore, respectively, while the recoveries amounted to Rs 253 crore. During the current year, the corporation has targeted to sanction Rs 210 crore and disburse Rs 200 crore. The recovery is also expected to be higher at Rs 310 crore.

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