Kerala Transport Development Finance Corporation (KTDFC), a Kerala government-owned NBFC, has invited the wrath of depositors with individuals and institutions raising concerns over inability to redeem their hard-earned money, which purportedly carry full State government guarantee.

The matter shot into limelight on Thursday after it became known that the company defaulted on payout to Kolkata-based Ramakrishna Mission whose deposits had matured, forcing it serve a notice on the State government. Reports in circulation suggested the Mission had sent down a legal team to Thiruvananthapuram.

Discussions on

The State Chief Secretary was quoted as confirming receipt of the notice addressed to Bishwanath Sinha, Additional Chief Secretary, Finance. When contacted, Suviranandaji Maharaj, General Secretary, Ramakrishna Mission, Belur Math,told businessline that he was not aware of the matter.’

But he suggested the Thiruvananthapuram office of the Mission would be in a better position to respond. In turn, President of this office said he can confirm one of the ashrams had run into an issue with KTDFC over matured deposits which both parties have resolved to settle amicably. He dismissed as baseless reports of a legal team having reached Thiruvananthapuram.

No clarity

Mails sent to the Additional Chief Secretary, Finance and messages to B Ashok, Managing Director, KTDFC, have not elicited a reply till the time of going to press. A top official in the Ministry of Finance, however, admitted the NBFC is in a liquidity crisis. The government will intervene when warranted, but ‘at a time of its choice’.

Prior to doing so, it would seek to exhaust all ongoing attempts to defuse the situation. An official at KTDFC headquarters said preoccupations with financial year end rules out an immediate solution. Some form of settlement could be expected in the new financial year that begins on Friday (April 1).

Complaints from beyond

Customer complaints have so far originated mostly from outside of Kerala and enquiries suggest retired employees of both private and public companies are on the list. Among them is 80-year-old Delhi resident Ramesh Singh (name changed), who chose to park his retirement benefits with KTDFC.

A former employee from the private sector, Singh found the catchphrase “maturity amount and interest fully guaranteed by Kerala Government” alluring. He is shocked to see maturity claims since December 2022 have not been honoured. He was informed “the company has no funds to repay maturity proceeds and is looking for (State) government support”.

KSRTC defaults on loans

Mails sent to the Chief Minister, Transport Minister and the CMD of KTDFC have received a standard one-liner, ‘Your complaint has been passed on for appropriate action’, followed by a deafening silence. “They don’t even have the decency to inform depositors on the fate of their money. Isn’t it a clear breach of trust?,” Singh asked.

Sources in the Transport Department said the current impasse is because of non-payment of credit extended to various entities, including over ₹700 crore to loss-making Kerala State Road Transport Corporation (KSRTC). The annual Review of Public Enterprises in Kerala, 2021-22 tabled in the State Assembly agreed, saying the net worth of KTDFC has eroded to ₹ -350.73 crore. Accumulated loss at the end of the year under review is ₹399.33 crore.

Poor state of finances

Long-term borrowings in the form of fixed deposits stood at ₹600.45 crore. Short-term borrowings from banks and FIs amounted to ₹350 crore, unchanged from the previous year. Net loss stood at ₹43.47 crore, comparably lower that previous two years. Finance costs vis a vis FIs, banks and others too had shrunk to ₹87.72 crore.

The plight of the KTDFC reflects the bleak financial position of the state whose ‘committed expenditure’ on salaries, pensions, and interest robs as much as 70 per cent of the estimated revenue receipts during 2023-24. This has limited the State’s flexibility to decide on other expenditure priorities such as capital outlay. Half of the public sector undertakings are running in loss with KSRTC, to which KTDFC has ‘bled’ loans, recording the highest at ₹1,787 crore during 2021-22 .

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