Kerala Financial Corporation (KFC) is one of the premier state level financial institutions in the state. It gives financial assistance to small and medium scale industries in the state.  Smt. Lida Jacob, IAS is the Managing Director of Kerala Financial Corporation. Her profile is given below :-
Educational Qualifications : M.A. (English Litt.)
University College, 

B.A. (English Litt)
St. Teresas’ College, 

Post held : Joined Service in 1978 -  Training 1978-80
1980-83 - RDO & Sub Divisional Magistrate, Alapuzha.
1983-87 - RDO & Sub Divisional Magistrate, Kottayam
1987-88 - Additional Secretary (Land Revenue)
1988-90 - Director of Rehabilitation & Deputy Secretary (Labour Deptt.)
1990-92 - Director, Kerala Urban Development Project (World Bank aided) & Joint Secretary (Local Admn. Deptt.)
1992-94 -  Collector & District Magistrate, Kollam
1994-96 -  Managing Director, MILMA & Diary Development Commissioner.
1996 to April 2000 - Director of Public Instruction, Trivandrum.
At present -   Managing Director, Kerala Financial Corporation, Trivandrum

Since its inception in 1953, KFC has assisted about 35000 units throughout the length and breadth of Kerala.   The cumulative sanctions amounted to Rs.1939.29 crores as on 31.03.2000.   Loans amounting to Rs.1466.40 crores have been disbursed till that date.   Performance of KFC during the last four years is given below :  

(Rs. in lakhs) 
1996-97 1997-98 1998-1999 1999-2000
Sanctions 21550 26035 20969 17631
Disbursements 18861 19944 19129 14977
Recovery 15735 16556 20329 22995
The decline in sanction and disbursement is mainly due to the general recession in the industrial sector and other spheres of the economy as a whole, and it is not unique to KFC alone. Inspite of the general sluggishness in the economy, the operational performance of KFC is encouraging. It retains the ‘A’ category status awarded by the IDBI for well-performing state financial corporations. According to the Development Banking Report brought out by the IDBI, KFC is one of the best five SFCs in the country.

KFC has 15 offices located in the District Headquarters and 5 Regional Offices. It has fully computerised its operations. Statement of Accounts can be issued to borrowers on demand. KFC has tackled the Y2K roll over problem without any outside support.

KFC has made several customer-friendly policy changes during the last month. KFC’s interest rates are competitive. Rate of interest for all the general schemes have been reduced to 15% p.a. For prompt repayment, a rebate of 1% is also given.  

Sanction and disbursement procedures have been simplified.  Relaxation of collateral requirements and DER norms are considered on merits.

Range of financial assistance

(a) The Corporation provides financial assistance to all types of industries engaged in manufacturing or servicing activities where the project cost for such loans does not exceed Rs.12 crore. For service sector the limit is Rs.10 crore. The unit (existing/new) should necessarily be in Kerala. The maximum term loan limit to Corporate Sector is Rs.240 lakh and others Rs. 120 lakh.

(b) Besides giving loans to new/existing units for manufacturing and processing activities, KFC also provides loans for service sectors like tourism activities, hotels, hospital, nursing homes, veterinary clinic, pharmacies, marriage halls, commercial complex, transport, mobile catering units etc. and  need based working capital assistance to small scale and medium scale industrial units.

(c) The Corporation presently extends its activities to cover hire purchase, lease finance, bill discounting, Information Technology and Software Development Sector, ISO 9000 Certification, Technology development & modernisation of Jute, Textile Industry and so on.

(d) The Corporation has floated a Venture Capital Fund with a Corpus of Rs.20 crores with contribution from KFC, KSIDC and SIDBI in the ratio of 1:1:2. The fund will be utilised for Information Technology Industry, Bio-technology and other hi-tech industries.

(e) KFC, as part of its diversification, has created innumerable unique assistance schemes to suit the fast changing requirements of promoters. Assistance range from short term loan to long term to equity type. At  KFC, the entrepreneur can select the scheme of his choice. Decision on loan application is taken within 30 days. KFC allows a long repayment period of 5 to 10 years to service the debt with 3 to 24 months initial moratorium period.

Resources :

Bonds, Share Capital and Plough Back continued to be the major components of the resources.   The Corporation has availed of Line of Credit (LOC) from commercial banks during the year.

i)  Share Capital  

The continued financial support from the Government of Kerala in the form of share capital was available this year also.  The Government contributed Rs.1300 lakhs towards share capital.   The share holding pattern as on 31.03.1999 was as follows : 

(Rs. in lakhs)
a. Govt. of Kerala 8992.92 85.64
b. IDBI 1482.92 14.12
c. Commercial Banks Insurance Company etc. 22.54 0.22
d. Private individuals  2.04 0.02
Total 10500.42 100.00
ii)  Bonds 

The Corporation issued bonds worth Rs.4000 lakhs during the year, with a coupon rate of 12.50% in our tranche.

iii)  Refinance

An amount of Rs.9099 lakhs from SIDBI and Rs.123 lakhs from IDBI was drawn during the year.   The total refinance drawal of Rs.9222 lakhs constituted 48.21% of disbursements in 1998-99.

Refinance repaid to SIDBI amounted to Rs.2560 lakhs and to IDBI Rs.229 lakhs.  The balance outstanding on account of refinance at the end of the year was Rs.28539 lakhs to SIDBI and Rs.825.22 lakhs to IDBI.

iv)  Line of Credit

During the year, the facility of LOC was availed from Central Bank of India (Rs. 400 lakhs), Syndicate Bank (Rs.500 lakhs) and from Corporation Bank (Rs.500 lakhs).

v) Ploughback

The revenue surplus during the year was Rs. 1359 lakhs.   Principal receipts were Rs.10112 lakhs.   After repaying refinance of Rs.2789 lakhs, the capital surplus amounted to Rs.7323 lakhs.   The plough back of Rs.8682 lakhs constituted 45.39% of the disbursements and continued to be a major source of funds of disbursements.

Plough Back

F.Y. 1995-96 1996-97 1997-98 1998-99
P.B.% 33.69 36.31 33.53 45.39
An amount of Rs. 291.71 lakhs was paid to the State Government towards guarantee commission for the guarantee provided for the bonds issued by the Corporation.

The increase of Rs.1411 lakhs on account of interest on borrowings  is on account of the increase in borrowings by way of refinance and Bonds.

A provision of Rs.177 lakhs has been made for dividend.   During the current year, an amount of Rs.852.38 lakhs was written off as bad debts.   The provisioning for doubtful debts was reviewed and additional provision of Rs.700.09 lakhs was transferred from General Reserve/ Other Reserve.

Operating Results

The financial performance continued to show improvement during the year 1998-99 also.   The total income was Rs.10510 lakhs.   The Corporation could post a net profit of Rs.243.73 lakhs after write off, provision for income tax, statutory reserves, etc. during the year.