Meeting of COSIDICI :
Committee Meeting of COSIDICI was held on 31.05.2001 at Manali. During
the course of deliberations the Executive Committee of COSIDICI had
expressed serious concern on the future prospects of SFCs in view of
the deregulation of the financial sector and resultant competition which
they had to face from commercial banks in the field. Inspite of the
amendments to the SFCs Act and recommendations of the Gupta Committee
on restructuring of SFCs, it was felt that a level-playing field has
been denied to SFCs as their cost of funds was very high as compared
to that of commercial banks. Also SIDBI's refinance rate is high as
compared to that of other developmental financial institutions leaving
SFCs with a very small margin to operate. In addition, SIDBI has been
reducing the refinance limit and has not shown any response towards
the request of SFCs for relaxing eligibility norms of the borrowing
units in terms of owned funds (exceeding Rs.10 crore) thus depriving
them from entertaining good medium scale units for financing. SFCs also
were feeling ignored by the Government of India which did not take them
into consideration while formulating national policy for small scale
industry. The Executive Committee, therefore, resolved that a delegation
from COSIDICI may meet the Secretary (Banking) in the month of July
2001 and place before him a detailed memorandum highlighting the major
issues adversely affecting the functioning of SFCs and seek his intervention
in the matter. It was also proposed that Secretary (B) may be requested
to invite, Chairman & Managing Director, SIDBI to attend the proposed
meeting. The E.C. further resolved to prepare a `Status Paper' incorporating
the various issues to be identified for discussion at the said meeting.
A sub-committee comprising of (i) Smt. Sharwaree Gokhale, MD, MSFC;
(ii) Shri J.P. Goshi, MD, GSFC; (iii) Shri S.K. Sen, MD, WBFC; (iv)
Smt. Upma Choudhary, MD, HPFC; (v) Shri Som Parkash, MD, PFC was constituted
with Shri K.K. Mudgil, Secretary General, COSIDICI as convenor to prepare
the paper. The E.C. desired that Secretary General may write to all
SFCs inviting their views for preparing the `Status Paper' and the same
may be considered by the Sub-Committee while preparing the paper. The
E.C. also resolved that the above sub-committee would examine the Prudential
Norms introduced in SFCs by IDBI/SIDBI. As these norms are based on
the norms for banks and not entirely relevant to the operations of SFCs
the sub-committee was asked to make suggestions for making relaxations
in these norms.
While the necessary
preparations for meeting the Secretary (Banking) were in progress it
was learnt from various press reports that Government of India had turned
down the proposal to provide recapitalisation of Rs.3,200 crore to the
sick SFCs. This matter was brought to the notice of the then President,
COSIDICI, Smt. Yasmin Ahmed who suggested that a special meeting of
the Executive Committee to discuss the matter in its proper perspective
may be convened on June 25, 2001 at New Delhi and a suitable strategy
be drawn for holding discussions with the Minister of State for Finance,
Shri Balasaheb Vikhe Patil. This meeting was postponed to 20.07.2001.
Secretary General met with officials of the Finance Ministry on 12.06.2001
and was assured of a date for a meeting with the Minister of State in
the near future. E.C. further decided that a meeting with CMD, SIDBI
be held after the meeting with Secretary (Banking) to resolve the operational
problems being faced by SFCs.
The E.C. deliberated
upon the proposal for making permanent arrangements for providing training
to the officers of SLFIs at College of Agricultural Banking, RBI, Pune.
Providing need based training programmes to officers of SLFIs has been
the main focus of attention of COSIDICI for the past two years. The Principal
of the above college had agreed to structure the training module keeping
in view the requirements of our members. The college would charge a fee
of Rs.8,000/- per week and trainees would be provided single room with
attached toilet accommodation in the hostel . The E.C. resolved to approve
the proposal on a long term basis. The college was requested to include
four programmes i.e. 2 in each category (one for Junior level and one for
Senior level Managers) in their calender for the year 01.07.2001 to 30.06.2002.
The E.C. desired that COSIDICI may circulate the details of the training
programme received from CAB, Pune among the Member Corporations for deputing
their officers for training. The E.C. further resolved to request SIDBI
for subsidising the training of officers of SLFIs at CAB, Pune. The course
content has been finalised and will be circulated among Member Corporations
shortly. Shri P.B. Nimbalkar, CMD, SIDBI has been requested for provision
of subsidy for training of officers of SLFIs. Reply is awaited.
of Business Profile of SLFIs
in the March-April 2001 issue of COSIDICI COURIER, COSIDICI had suggested
the following two proposals for consideration by SLFIs to diversify their
loan portfolio and improve profitability :
may set up Housing Finance Subsidiary to provide housing loans to individuals,
institutions and government employees in their respective states.
marketing of Insurance products of Life and General Insurance Companies
as Corpoate Agents.
After a great
deal of discussion the E.C. resolved that the individual corporations may
discuss the proposal in the meeting of their Board of Directors and take
their own decision in the matter and keep COSIDICI informed.
29 of the SFCs Act 1951 ~ Disposal of assets taken over by SFCs/SIDCs
Committee appreciated the proposal of MD, MSFC that the properties taken
over by SFCs by invoking Section 29 of the Act for sale may be put on the
Website of COSIDICI for wider publicity. COSIDICI has already received
the list of such units from some of our Member Corporations. Some of the
lists have already been put on COSIDICI website. The others are under process.
COSIDICI is also in correspondence with some of the leading Chambers of
Industry viz. FICCI & CII to circulate these lists, for giving wide
publicity, amongst their members.