Himachal Pradesh Financial Corporation

Chairman Speech

 

Speech Delivered by Mrs Asha Swarup, IAS, Chairperson at the 42nd  Annual General Meeting of Himachal Pradesh Financial Corporation held on 30.07.2009

Ladies and Gentlemen,

       I extend a warm welcome to all of you to this 42nd  Annual General Meeting of the Shareholders of the Himachal Pradesh Financial Corporation. The Annual Report of the Board of Directors on the working of Himachal Pradesh Financial Corporation and the Audited Statement of Accounts for the year 2008-09 have already been sent to you.

       During 2008-09, uncertainties, volatility and major bank failures dominated the global economic scenario thereby resulting in a steep fall in global real GDP which affected the sustained growth of emerging market economies. The global slow down affected the Indian economy also, especially its export  sector  due to reduction in consumption demand. The Indian economy is estimated to slow down to a GDP growth of 6.5% during 2008-09 as against GDP growth of 9% during the previous year.

       During 2008-09, monetary management of RBI was dominated by responses to the spill over effects of global financial crises and the need to address slackening of domestic conditions. During the period from September 08 to March 09, the RBI reduced Repo Rates from 9% to 5% and Reverse Repo Rates from 6% to 3.5% whereas CRR was also reduced from 9% to 5% indicating a soft interest regime. Adoption of Information Technology, adherence to capital adequacy norms and management of NPAs continued to be a focal agenda for banks. This was the scenario in which Himachal Pradesh Financial Corporation worked during 2008-09.  

                               
Sanctions

       During 2008-09, the Himachal Pradesh Financial Corporation sanctioned loans of Rs 30.39 crores against Rs  11.27 crores  during the previous year and thus recorded 170% growth.  During 2008-09, the Corporation also cancelled loans of Rs 3.76 crores which were lying idle since long and were unlikely to fructify. The Small Scale Industrial units were sanctioned loans of Rs 19.38 crores and thus accounts for 63.79% of the total loan sanctions during the year.

       Disbursements

The Himachal Pradesh Financial Corporation disbursed total loans of Rs 17.53 crores during 2008-09 against Rs 15.16 crores during the previous year and thus recorded 15.63% growth.  Since inception, the Corporation has made total loan disbursements of Rs 515.34 crore upto 31st March, 2009. The Corporation had pending commitments of Rs 29.55 crore at the close of the year.


        Recoveries

       During 2008-09, the Himachal Pradesh Financial Corporation made recovery of Rs 37.83 crores against Rs 49.87 crores during the previous year. Recovery figure declined steeply during the year mainly because of impact of slow down and shrinkage of total loan asset portfolio from Rs 172.12 crores in March, 2008 to Rs 163.71 crores in March, 2009.  After accounting for reliefs given to various units facing difficulties, 272 borrowers remained in default to the extent of Rs 36.97 crores (excluding suit-filed cases) in March, 2009.

        Resources

During this year, the State Government released equity of Rs 20 crores as pass through for investment in HRTC. This amount has been kept in the share application money account as HRTC has not so far issued share certificates to this Corporation. The paid-up capital of the Corporation thus stands  at Rs 28.57 crores. During this year, SIDBI did not release any resource support although the Corporation made due payments of Rs 11.74 crores to SIDBI. During 2008-09, the Corporation could not raise any bonds. There was no default in respect of SIDBI or any other bank/institution at the close of the year.

        Profit & Loss

       During 2008-09, the Corporation earned total revenue of Rs 16.64 crores against Rs 19.12 crores in the previous year and incurred expenditure of Rs 20.80 crores against Rs 20.97 crores in the previous year and thus suffered business loss of Rs 4.16 crores against Rs 1.85 crores during the previous year.

                                               
        Management of NPAs

       The Corporation made efforts to maintain NPAs at a low level, but due to downgradation of a few loan accounts where the stake was high, net NPAs of the Corporation increased from 6.82% in March 2008 to 40.18% in March 2009. Although the Corporation has rescheduled these accounts and thus the units were not in default as per revised repayment schedule,  these cases have to be kept in NPA category for one year as per applicable guidelines.  They can be upgraded after watching payments for one year.    

        Future Strategy

        The future strategy of the Corporation is:

  • Diversify activities and build good portfolio of standard assets.
  • Revise interest rates keeping in view market scenario and interest rates of competitors.
  • Encourage settlements in doubtful and loss cases for reducing NPAs.
  • Curtail costs and improve recovery.

Before I conclude, I express my deep appreciation for the valuable co-operation and support extended by my colleagues on the Board. I also thank the officers and staff of the Corporation for their efforts.

       I thank you all for attending this Annual General Meeting and hope the Corporation will continue receiving your co-operation in the  future also.