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| SFC in financial mess, losses reach Rs 172.56 crore | | | Syed Junaid Hashmi
JAMMU, Nov 15: With State Government unable to find a way out of financial mess, State Financial Corporation (SFC) despite being in doldrums continues to redress needs of politically well-connected business aspirants.
Corporation is getting bad to worse yet it is disbursing heavy loans and advances to applicants, well-connected in the State administration and above all enjoying political patronage of NC and Congress leaders. According to official records available with Early Times, the Corporation is suffering from heavy cumulative losses amounting to Rs. 172.56 crore. The losses have so far remained un-recovered.
What actually doomed the corporation was the turmoil that hit the state in the year 1989. After having come into being in December 1959, Corporation was successfully nourishing first generation entrepreneurs of the state and was rated one among 10 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 during the year 2009-10, 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. |
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