Kerala Financial Corporation lost Rs 101 crore by investing in Reliance Finance, says Satheesan

Leader of Opposition V D Satheesan on Thursday alleged that Kerala Financial Corporation (KFC), a state-owned entity, had caused a loss of Rs 101 crore to the state by investing in Reliance Commerce Finance Ltd, (RCFL) a liquidated private firm. He also demanded that the state government should probe the corruption charge.

Satheesan said that the Modi government and Pinarayi government were adopting a generous approach towards Anil Ambani.

“The aim of forming the KFC was to provide medium-long term credit to industrial undertakings which falls outside the normal lending activities of commercial banks.

However, on April 26, 2018, KFC invested Rs 60.80 crore in RCFL. This was done according to the decision of the asset liability management committee (ALCO) of KFC on April 19, 2018. In the annual report of the KFC in 2018-2019 there was no reference about RCFL,” he said.

Satheesan said that according to Section 33 of the State Financial Corporation Act, it is stated that investment should be made in the Reserve Bank or nationalised banks.

“The board meeting of the KFC for the financial year 2018-19 was held on June 18, 2018. However, according to ALCO guidelines it is said that investment in bonds should be based on the decision of the KFC board. The name of RCFL which was hidden in the 2018 and 2019 annual reports was revealed in the 2020-21 annual report as ‘investment in NCD- RCFL’. The company was liquidated in 2019.

The KFC had not received interest for the investment from March 2020. It is stated in the 2020-21 annual report that KFC got Rs 7.09 crore when RCFL was liquidated. The KFC had suffered a loss of Rs 101 crore, including interest. However, the state government has not taken any step in this regard. The actions of the government underline the fact that it is right-wing rather than Left front ,” he said.