Thiruvananthapuram, Jan 2 Kerala Leader of Opposition V.D. Satheesan on Thursday alleged a corrupt deal between the state-owned Kerala Financial Corporation (KFC) and the now-liquidated Reliance Commercial Finance Ltd (RCFL) in 2018.
He claimed the deal, orchestrated by vested interests in the state government and certain KFC officials, resulted in a loss of Rs 101 crore to the state.
Addressing the media here on Thursday, Satheesan highlighted irregularities in KFC’s annual reports from 2018-19 and 2019-20, which mention a Term Deposit with a Bank and Non-Convertible Debentures (NCD) amounting to Rs 60.80 crore.
“The deposit was made despite knowledge that the company was in financial distress. Furthermore, the company’s name was conspicuously absent from KFC’s annual reports in 2019 and 2020. It was only in the 2020-21 report that the investment was explicitly identified as ‘Investment in NCD-RCFL’,” said Satheesan.
He criticized the KFC for straying from its primary mandate of funding MSMEs. “KFC is expected to invest funds as per prudential norms and Board-approved securities, focusing on financing medium and small-scale industries. This deal violated those principles,” he added.
He further elaborated that KFC's primary purpose is to provide medium and long-term credit to industrial undertakings, which fall outside the normal activities of commercial banks. “The intention is that State Corporations will confine their activities to financing medium and small-scale industries and, as far as possible, consider only such cases as are outside the scope of the Industrial Finance Corporation,” he said.
Satheesan further pointed out that RCFL was liquidated in 2019, and the KFC annual report of 2020-21 revealed that Rs 7.09 crore was recovered post-liquidation.
“We raised questions about this deal during Assembly sessions, yet no answers have been provided even years later,” he stated.
The Opposition leader alleged commissions were involved and hinted at further revelations once the state government provides the requested information.
“We are waiting for the government to respond. Once we have their answer, I will disclose more about this corrupt deal and those who benefited from it,” Satheesan warned.
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