Plans to restructure OSFC gathers steam

Odisha State Financial Corporation (OSFC) may get Rs 28 crore assistance from the state government to pay off liabilities of Small Industries Development Bank of India (Sidbi).

At a recent meeting on restructuring plan of OSFC, it has been decided to move the government seeking assistance to clear Sidbi's dues. After repaying the debt, OSFC would obtain a 'no-dues' certificate from Sidbi, making the state-owned company debt free. As part of the restructuring, it is suggested that NPAs (non-performing assets) of OSFC be sold to either a third party asset reconstruction company (ARC) or an ARC to be set up with government support. Alternatively, these assets could also be acquired by the government at a discount as has been done in some states.

The state chief secretary G C Pati has stressed on getting these assets valued conservatively and arrive at a figure at which they can be transferred.

OSFC would also identify four to five retired officials of banks or financial institutions with experience in loan syndication, MSME (micro, small & medium enterprises) financing, lease financing and venture capital to work in the corporation on contract basis during the restructuring process. The engagement of these officials is expected to help strengthen the financial services activities of OSFC.

To trim staff strength at OSFC, 60-70 employees of the corporation would be taken on deputation at the directorate of industries and other government departments to slash manpower cost and also do away with the need for voluntary retirement scheme (VRS).

OSFC is likely to be entrusted with implementing government schemes like State Mission for Food Processing. For such government sponsored schemes, OSFC would function as the nodal agency for disbursing subsidy and incentives. OSFC's product portfolio would include financial and non-financial services. The corporation would explore and take steps to monetise opportunities for sale of some land and buildings to fund its business operations. The finance department would examine the possibility of OSFC entering into a memorandum of understanding (MoU) with the Odisha State Cooperative Bank to meet working capital needs of some MSME units.

RNK Prasad, consultant, Odisha Modernising Economy, Governance and Administration (OMEGA), a joint initiative of the state government and UK based DFID recently made a detailed presentation to the chief secretary on full corporate restructuring of OSFC. OMEGA team would submit a business plan for revival of OSFC, covering financial and non-financial services. The report would be placed before the government for approval.

KEY FEATURES OF PROPOSED RESTRUCTURING

• Govt to pay Rs 28 crore to clear Sidbi's dues
• NPAs to be sold to an asset management company
• Staff strength of OSFC to be trimmed
• Company to sell land, building to fund business activities
• OSFC may be asked to implement various govt schemes
• Retired officials of banks & FIs to be drafted in for niche services