A Council of State Financial Institutions will be set up with the Chief Minister as the chairperson. The council will define the purpose of the loans for entrepreneurship development and will be responsible for the review of their progress, Finance Minister T.M. Thomas Isaac said in the Budget 2021-2022.
Reorganisation of financial institutions like Power Finance Corporation, Kerala Transport Development Finance Corporation, Tourism Finance Corporation, Kerala Urban and Rural Finance Development Corporation and other corporations like Women’s Development Corporation will also be undertaken through an expert committee.
Insurance dept.
The State Insurance Department will be reorganised in 2021-22. Efforts towards modernisation and business expansion will be taken. Revenue, which was ₹411 crore in 2015-16, has increased to ₹658 crore in 2020-21.
The Minister said the Insurance Department had ₹8,348 crore as fund balance from a limited operational area. “This fund balance will be increased significantly. For this, insurance activities will be extended to government-related sectors such as Kudumbashree, cooperative societies, employment guarantee, welfare funds,” he added.
Financial institutions can play a crucial role in the development of the State and most significant among these are KIIFB and Kerala Bank. KIIFB projects worth ₹15,000 crore will be completed in 2021-22. Kerala Bank, with a deposit base of ₹61,000 crore, is the second largest bank in Kerala. As soon as approval for NRI deposits is received from the RBI, it will not be difficult to double the bank’s deposit base.
On becoming part of the core banking, cooperative banks will be converted into bankers of local government institutions. While standing firmly by the cooperative principles and values, he said the Kerala Bank will abide by all the RBI guidelines also.
KFC to be company
The Kerala State Financial Corporation’s (KFC) non-performing assets that was 10.7% in 2015-16 could be reduced to 3.5% through imaginative financial restructuring. The Finance Minister said the KFC, functioning under the State Financial Corporation Act, 1951, will be reorganised as a company functioning under the regulations of the State government. With the approval of the RBI, it will be converted into a financial institution capable of mobilising deposits.
Kerala State Financial Enterprises’ investment in KIIFB bonds through ‘Pravasi Chits’ will increase to ₹1000 crore in 2021-22.
