With the balance-sheet of Assam Financial Corporation (AFC) improving steadily for the last four years, the Small Industries Development Bank of India (SIDBI) has come forward to recommence refinancing to the corporation.
SIDBI entered into a Memorandum of Understanding (MoU) with AFC to restart refinancing on Saturday.
The tripartite agreement between SIDBI, government of Assam and AFC was signed by RM Malla, chairman and managing director of SIDBI, HS Das, principal secretary (finance) of government of Assam and MS Manivannan, managing director of AFC.
SIDBI had stopped refinancing AFC since 1994 after its financial health deteriorated and the non- performing assets (NPA) burden grew.
However, for the last four years, the financial condition of AFC has been on an upswing and the corporation has been registering operational profits. Once upon a time, AFC was the premier financial organisation of North-Eastern Region and financed many pioneering projects in the state and region.
Addressing a press conference, Malla said that the AFC now fulfilled the three pre-requisite conditions, viz.; solvency, enough liquidity and ability to pay future borrowing, for SIDBI to enter into an agreement of refinancing.
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Terming it a “historical moment” Manivannan said though steps were being taken to revitalise AFC, resource level was always low till SIDBI came forward.
Welcoming the agreement between SIDBI and AFC, RS Joshi, president of Federation of Industry and Commerce of North-Eastern Region (FINER) said, “We now expect AFC would be able to disburse more loans to the needy MSME sector.” SIDBI’s direct credit assistance in the North-Eastern Region has increased from Rs 15 crore in the year 2007 to Rs 44 crore in 2010.