While the state government has agreed to provide Rs 6 crore towards equity contribution to APSFC, besides assuring further equity infusion in the future based on performance review, SIDBI on its part has offered a 2 per cent interest rate concession on all the existing refinance loans and also a 2 per cent rebate for prompt payment of all future refinance loans availed by APSFC.
Under the MoU, the state finance corporation has agreed to initiate certain internal restructuring measures and show performance improvement in the areas of recovery, cost reduction and containment of non performing assets (NPAs) in respect of fresh sanctions.
The state government has also agreed to extend guarantees to the SLR (statutory liquidity ratio) and non-SLR bonds and other borrowings required for funding the loans sanctioned by the corporation.
The memorandum of understanding will be in operation for a period of five years or till the corporation is fully restructured/recapitalised, whichever is later. It came into effect retrospectively from April 1, 2003.
The performance of the corporation will be reviewed once in a year or at such intervals as may be decided by SIDBI and the state government, Ratan P Watal, the managing director of APSFC, stated in a release here today.
It may be recalled that APSFC has improved its performance in the recent past and made a net profit of Rs 2.36 crore in 2002-03, as against a loss of Rs 13.13 crore in the preceding year.
With a focus on small and medium enterprises (SMEs), the corporation has set a target Rs 419 crore for sanctions and Rs 312 crore for disbursements during the current fiscal. Last financial year, it disbursed Rs 300 crore loans and made a recovery of Rs 409 crore. It is hoping to recover Rs 471 crore during the current year.
The net NPA level has been reduced to 27 per cent from 60 per cent in the last four years.
As part of its business expansion plans, APSFC is gearing up to become
