OSFC inks pact with SIDBI to avail of concessional credit

Paving the way for availing concessional finance, the Orissa government and its financing arm, Orissa State Finance Corporation (OSFC) today inked a tripartite agreement with Small Industries Development Bank of India (SIDBI).

Industry secretary, Saurabh Garg, managing director of OSFC, K N Khatai and chairman-managing director (CMD), SIDBI, R M Malla signed the document in the presence of the chief minister Naveen Patnaik.

The MoU will enable OSFC to get refinance from SIDBI as it has attained positive networth and capital adequacy ratio (CAR) of 6.25 percent. Apart from getting new line of credit, OSFC will be able to repay the outstanding of about Rs 140 crore to SIDBI at a rate of 7.5 percent interest. However, the interest rate on future lending by the bank to OSFC will range between 7 and 9 percent depending on the period for which the loan is availed.

Speaking on the occasion, the chief minister Naveen Patnaik said, the state government has taken a number of steps to provide support to micro, small and medium enterprises (MSMEs). The MSME policy, 2009, adopted by the state government provides for conducive environment to the MSME sector.

The large projects being set up in the state have been asked to develop downstream and ancillary enterprises which will offer immense job opportunities to young people. About 5000 MSMEs are registered every year and the focus is on skill upgradation.

Stating that OSFC has assisted more than 28,000 MSMEs in the state, the chief minister said, this has created employment opportunities for more than 2 lakh people. The state government has infused more than Rs 352 crore to restructure OSFC. The infusion of funds along with the support provided by SIDBI in restructuring the outstanding loans will go a long way in improving the liquidity of OSFC.

Industry minister Raghunath Mohanty said, the state government has initiated various steps for revival of OSFC which included reducing the size of manpower from 913 to 298. Besides, OSFC has been able to recover Rs 294 crore loans making it eligible to avail refinance from SIDBI, he added.

SIDBI chief Malla said, OSFC is the 12th State Finance Corporation (SFC) that the bank has entered into MoU. It is expecting the growth in lending by about 25 percent for the country as a whole. Similarly, the refinance to micro-finance institutions (MFIs) is expected to be about 20 percent. He opined hat risk assessment and mitigation will have to be taken up by OSFC in the present scenario. The MoU with SIDBI is a part of the OSFC’s restructuring package approved by the state cabinet.