JAMMU, May 20: From backdoor appointments to favourites getting jobs during NC-Congress era, State Financial Corporation (SFC) continues to bear the losses with no mechanism in-place to ensure effective recovery from those who have taken heavy loans and are little bothered to return the same.
SFC is going from bad to worse yet it is disbursing advances to applicants, well-connected in the state administration and above all enjoying political patronage. According to official records available with Newspoint Bureau, the corporation’s cumulative losses have reached Rs. 250 crore and most of these losses have remained un-recovered. It is highly unlikely that these losses would be recovered easily.
The report on the financial position of SFC, a copy of which is with Newspoint Bureau, clearly shows that SFC went into losses as soon as turmoil hit the state in the year 1989. After having come into being in the year December 1959, corporation was successfully nourishing first generation entrepreneurs of the state and was rated one among ten best SFCs of the country.
During the turmoil, corporation claimed to have suffered heavy revenue losses. This was further compounded by government’s unique policy of giving concessions to entrepreneurs who had suffered losses. Without taking into account serious impact of giving extraordinary concessions to entrepreneurs, state government forced the corporation to launch settlement schemes to provide germane support to the industrial and allied sectors of the state which had claimed to have suffered heavy losses during prolonged disturbances.
These ‘fantastic’ settlement schemes resulted in State Financial Corporation (SFC) being forced to waive off more than Rs. 543.93 crore. On the aid and advice of high ranking bureaucrats, SFC had introduced settlement schemes with the hope that the co-promoters of the corporation i.e. state government and SIDBI would come to its rescue by sharing the reliefs and concessions.
However, this did not happen. State government instead of coming to the rescue of State Financial Corporation (SFC) overburdened it with requests for giving fresh loans as well as concessions to politically well-connected entrepreneurs. This further deteriorated financial condition of the corporation. According to official records, SFC’s non-performing assets (NPAs) have touched Rs. 92.63 crore and its equity has got totally eroded.
Further, high cost of funds has also got eroded. Despite this, the corporation continues to play its role as development bank in the state and it sanctioned/disbursed loans amounting to Rs. 2.32 crore and Rs. 2.63 crore respectively. Corporation’s cash income also went down. Compared to year 2008-09 when it had earned cash income of Rs. 5.74 crore, corporation earned cash income of Rs. 3.66 crore.
Owing to continuous loss suffered by SFC, there has been no change in statutory reserve fund. Further, the state government preferred not to subscribe towards the share capital of the corporation. However, SBI exercised the option and withdrew its share capital of Rs. 5 lakh and the paid-up capital got reduced.