Delay in signing MoU with SIDBI hinders OSFC revival

Pending the signing of the tripartite agreement with the Orissa government and Small Industries Development Bank of India (SIDBI), the state owned Orissa State Finance Corporation (OSFC) is yet to start a special campaign for recovery of outstanding interest and principal.

This is causing delay in resumption of lending by the state owned lender to various industrial units in the state. The outstanding interest and principal to be recovered by the corporation stand at Rs 1700 crore and Rs 400 crore respectively by March 2008. In a meeting chaired by the secretary, public enterprises (PE) department of the Orissa government, with the officials of the OSFC, it was decided that the corporation should start a special drive to recover about Rs 300 crore from the outstanding interest and principal amount. This can be used as the seed capital for financing the small and medium enterprises in the state. However, OSFC is yet to start the initiative which could have enabled it to resume lending to various industries in the state. According to an official, the corporation has been taking proactive steps for increasing the recovery. While Rs 43 crore has been collected during 2008-09, the total collection is likely to be about Rs 45 crore by the end of the current fiscal. Using the collection, it has already paid about Rs 113 core to SIDBI towards its pending dues.

 

The process can be expedited only after the extended One Time Settlement (OTS) policy, approved by the government, is implemented after the elections, the official added.

Meanwhile, the delay in signing of the tripartite agreement among the Orissa government, SIDBI and OSFC has emerged a major bottleneck for the revival of OSFC. Though the state cabinet approved an amendment allowing conversion of Rs 254 crore infused by the state government in OSFC for liquidating the SLR bonds to share capital with interest waiver, the non-receipt of clearance of the Reserve Bank of India (RBI) is delaying the process further, sources said.

The state government, on its part, has fulfilled all the obligation pertaining to the implementation of the restructuring package for revival of OSFC.

It has issued the notification for conversion of Rs 40.2 crore as share capital from loan subvention and loan in lieu of share capital. Further, notification for waiver of interest of Rs 33.11 crore has been issued by it after waving 48.97 crore as interest accrued up to 30 September 2009.