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By Our Staff Reporter
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.
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