WBFC mulls new fund options

West Bengal Finance Corporation (WBFC) may not opt for raising funds through bonds this year in view of volatile market conditions and erosion in their value due to high interest rates.

This fiscal, WBFC aimed to raise about Rs 50 crore, but might not opt for bonds,said Kamal Chakrabarty, managing director of WBFC. Instead, it could depend on funding from Small Industries Development Bank of India (Sidbi) and own recoveries, and if required, funds from the state government, he added.

“If the market stabilises by September-October, WBFC might opt for issuing bonds. Funding from Sidbi may suffice,” he added.

WBFC could raise bridge loans from commercial banks this fiscal too.

WBFC raised its lending rates from August 1, 2008, by 50 basis points. Interest rates varied between 10 per cent and 13 per cent, depending upon the amount.

This fiscal, Sidbi would sanction up to Rs 45 crore to WBFC, and it had already drawn Rs 8 crore. Also, the state government would give Rs 15 crore as share capital to WBFC, against Rs 10 crore last fiscal.

In the current fiscal, WBFC had a disbursement target of about Rs 170 crore, against actual disbursement of nearly Rs 145 crore last fiscal. Its recovery target this year was around Rs 160 crore, against Rs 157 crore last year.

WBFC was expecting a surge in profit this fiscal, as last year, a change from cash to mercantile system of accounting led to more than 88 per cent dip in net profit, said Chakrabarty.

“Interest and financial expenses went up by 32 per cent on a year-on-year basis last year. Also, due to charging “interest accrued”, but not “due” in the profit loss account, a loss was booked,” he said.

The net NPA of WBFC last year was 9 per cent and this year the target was to keep it below 5 per cent. Last fiscal, the corporation had raised about Rs 54 crore through bonds.