Kerala Transport Development Finance Corporation (KTDFC)’s KTDFC) (a Non-Banking financial company wholly owned by the Government of Kerala) non-banking license is likely to be canceled. Malayalam Manorama reports that the Governor of the Reserve Bank has informed the KTDFC officials about this through a special envoy. Experts claimed that KTDFC has made financial transactions of around 4,000 crore rupees as investments and loans.
KTDFC had received Rs 130 crore as fixed investments from the Kolkata-based Sri Ramakrishna Mission. KTDFC failed to return the amount even after the maturity deadline. There are indications that the failure of KTDFC may also affect Kerala Bank. Kerala Bank has a massive liability in KTDFC.
KTDFC failed to repay the Rs 130 crore it received from the Kolkota-based Sri Ramakrishna Mission. The Sri Ramakrishna Mission complained to the Reserve Bank of India (RBI) about the non-return of the deposit. KTDFC’s bankruptcy was revealed during the investigation conducted by the Reserve Bank.
The RBI conducted a nationwide review of non-banking financial institutions in the country on the 17th. Allegedly, the RBI has found KTDFC’s activities illegal, and hence the license has been revoked. This will affect all cooperative banks in Kerala. RBI’s action against KTDFC is a big blow to cooperative bank networks.
KTDFC accepts deposits with the guarantee of the state government. Therefore, if the KTDFC cannot pay the money, it is the responsibility of the state government to return that money. But when it did not happen, the state guarantee became worthless. The mismanagement of Kerala’s finance department also hindered finding a solution to this problem.
The Reserve Bank has revoked the license of KTDFC, banning it from accepting deposits, borrowing, and lending. The government guarantees KTDFC investments, but as the limit is fixed, most investors might not get their money back.
KTDFC’s license cancellation will also affect Kerala State Road Transport Corporation (KSRTC). KSRTC is a Kerala government institution that is now insolvent. HinduPost reported how the KSRTC symbolizes how wretchedly Kerala communists treat their proletariat.
On behalf of KSRTC, Kerala Bank gave a loan of Rs 356 crore to KTDFC without any collateral on the instructions of former Finance Minister Thomas Isaac. That debt turned into a non-performing asset (NPA). This was also a heavy blow to KTDFC. The current crisis is due to the non-repayment of loans to various institutions, including the loss-making KSRTC of over Rs 700 crore.
The common man has invested in Kerala Bank and District Cooperative Banks. KSRTC has taken crores of loans from these district cooperative banks besides Kerala Bank. These banks accepted deposits from citizens and funneled their funds into KTDFC. KTDFC received these amounts and gave loans to KSRTC. It is feared that these district banks might lose crores of rupees.
Other amounts were given to various government institutions to buy vehicles and loans to government institutions. In other words, it was a scam created by the Kerala government to provide loans to KSRTC. For this purpose, they accepted thousands of crores of investment in the cooperative sector and misused it.
As a result, KTDFC has gone bankrupt without paying even the 170 crores they accepted from Sri Ramakrishna Mission. Then how will the investment of thousands of crores borrowed from the cooperative sector be returned? Because of the severe violations and collapse of the NBFC, the RBI has canceled the license itself.
Allegedly, Pinarayi Vijayan’s government and CPM leaders created this mess. They exploited the investment of thousands of crores in the cooperative sector of Kerala. The license has been canceled, and KTDFC has to pay 900 crores to Kerala Bank alone.
Apart from Kerala Bank, KTDFC has taken crores of loans from major district cooperative banks. This amount also turns into non-performing assets, destroying the entire Kerala cooperative sector. The collapse of KTDFC will gradually spread to Kerala Bank and Cooperative Banks.
KSRTC had taken hundreds of crores of loans from KTDFC to spend even on day-to-day operations. KTDFC took over the assets of KSRTC bus stations and the shopping complexes after they could not repay. However, in KTDFC, there was a situation where they could not return the amount to depositors even after maturity.
If the state auctions bus stations, the crisis will worsen again. How can KSRTC’s assets and bus stands be auctioned and sold? Unfortunately, the current regime is preparing for such evil moves. It is feared that such actions and measures to aid the tainted cooperative bank sector might become a disaster.
Loans given to KTDFC by Kerala Bank and Cooperative Banks have become non-performing assets. After the Karuvannur Bank scam came to light, the cooperative sector lost investors’ trust. KTDFC’s license cancellation will further deepen the current crisis.
The Enforcement Directorate (ED) has collected evidence that points to several corrupt politicians and officials who carried out black money transactions, allegedly totaling Rs 500 crore, through the accounts. ED is investigating the role played by former Kerala minister A C Moideen, who is facing allegations of benami (proxy) transactions in the Karuvannur bank case. Like Isaac, Moideen is a former minister in the previous Pinarayi Vijayan government.
Given the collapse of cooperative banks, deposits are being withdrawn en masse in many places. The crisis is moving to the point where the deposit-loan ratio in the cooperative banks is collapsing. Many cooperative banks have set limits on deposit withdrawals.
If the investors protest against this, there will be a situation where the cooperative banks will be closed down. Ordinary people who have invested in cooperative banks, including retirement benefits, will suffer.
