Kerala Financial Corporation bond issue gets Government nod

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posted on 12 years ago — updated on 1 second ago

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Kerala Financial Corporation (KFC)’s ambitious non-SLR bond issue to tap Rs 400 crore from the market has got the final nod from the government.

With the objective of increasing the Corporation’s loan portfolio size to Rs 1,500 crore in the coming years, the Cabinet decision would ensure unconditional and irrevocable government guarantee for the bonds for a period of 10 years.

Orders have been issued by the Finance Department in this regard. The bond raising proposal was announced by Finance Minister K M Mani in his budget speech for the financial year 2012-13, with a declared aim of extending easy loans at low rate of interest to manufacturing, hospitality, entertainment, housing and other real estate sectors as well as small and medium sector enterprises of the state.

KFC has targeted sanctions of Rs 600 crore and disbursed `500 crore for the financial year 2012-13. The Corporation will pay guarantee commission at the rate of .75 per cent of the guarantee amount annually and this will result in addition of more than Rs 3 crore per annum to the state revenue.

The Corporation is wooing the market with a track record of registering a profit of Rs 45.65 crore during 2011-12, along with lowest NPA level and a highest dividend declaration among the PSUs of Kerala.

“The bond issue will be after completing the process of credit rating and appointing a merchant banker. The process is expected to be completed by next month,’’ chairman and managing director of the Corporation Yogesh Gupta said.

‘’This time Corporation is planning to solicit participation of NRIs and NRKs also,’’ he added.

Kerala Financial Corporation had created history in the last financial year by getting the entire bond issue of Rs 200 crore fully subscribed, much before the date of closing of the issue. Rs 100 crore was fully subscribed within five working days from the date of opening of the issue and the Corporation had since decided to exercise the green shoe option of another Rs 100 crore to give an opportunity for even more investors.