The government is seriously considering the merger of the Kerala Transport Development Finance Corporation (KTDFC) and other similar government-owned Non-Banking Financial Companies (NBFCs).
The merger move was in the wake of the poor cash inflow into the KTDFC, apprehensions over honouring the maturity commitment of fixed deposit for which the government had stood guarantee and to ensure that borrowing capacity of the State was not affected, official sources told The Hindu.
The KTDFC has drifted from its main objective of triggering transport development to a lending agency, primarily for the State-owned Kerala State Transport Corporation (KSRTC) to pay salary, allowances, and wages to those on rolls.
A high-level meeting chaired by Finance Minister T.M. Thomas Isaac recently had decided to explore the possibility of a merger of the KTDFC with other similar government-owned NBFCs and infrastructure companies ‘as and when the financial situation improves.’
To overcome this crisis, the Kerala State Financial Enterprises (KSFE) has been asked to make available ₹35 crore immediately to the KTDFC with nine per cent interest to meet the maturity commitments of fixed deposit holders in November.
The KTDFC, having a valid certificate of registration issued by the Reserve Bank of India (RBI), has a debt burden of ₹1,600 crore now. These are mainly deposits collected from the public with attractive interest rates through various schemes.
The KTDFC needs ₹248 crore till March 2019 to honour the commitments of fixed deposit holders and others. Poor cash and fixed deposit inflow, economic situation of the State, reduction in interest rate for loans provided by the consortium of banks to the KSRTC and long repayment tenure had hit the KTDFC badly, the official said.
Now, the government has asked the KSRTC to transfer ₹1 crore daily from the surplus funds in the escrow account of the consortium loan to the KTDFC till the loan balance of ₹332.27 crore and outstanding long-term loan of ₹121 crore and interest are repaid.
The Principal Secretary, Transport, has been asked to review the financial position of the KTDFC monthly.