KSFC Profile

INTRODUCTION:
Financial institution play very important role in the economy of any country. These institutions facilitate covenant and effective channels of savings and investments, in a developing country like India, the role of these institutions becomes more pronounced in order to achieve rapid economic growth. Considering the need for such institutions, industrial financial corporation of India (IFCI) was setup in 1948.

At the same time it was felt that there is necessity to establish similar institution with a view to assisting smaller industries in different state needs of all the same concerns sprawled all over the country.

Karnataka financial corporation was established by the government of Karnataka on 30th March 1959 under the provisions of SFC at 1951 passed. All along, KSFC has played a pioneer role in the development of micro and small scale enterprises in the state of Karnataka. It has fulfilled the objectives of developmental lending such as industrialization of backward areas, assistance to weaker sections, promoting first generation entrepreneurs, assistance technocrats and women, several units, which received start up assistance from KSFC have today become large industrial conglomerates. By now there are 18 SFC’s functioning in the different states of the Indian union, these institution are closely modeled on the lines of IFCI, but different in the scope of there activities.

The principal objective behind setting of SFC’S is to provide medium and long term financial assistance to small and medium enterprise particularly when normal banking accommodation is not available, the other objectives are

Economic growth.
Balanced regional growth.
Widening of the entrepreneurial base through encouragement of new entrepreneurs.

INTRODUCTION OF KSFC:
Karnataka state financial corporation is a state level financial institution established by the state government in the year 1959 under the state financial corporations act 1951to meet mainly the long term financial needs of small and medium enterprises (SME’s) in the state of Karnataka.

The Karnataka state financial corporation, which prior to November 1,1973, was known as the mysore state financial corporation, was established on march 30th 1959,the n government of mysore established the Karnataka state financial corporation by notification no:FD.28 BIS 59 dated 30th march 1959.

The mysore government at Rs.2 crores fixed the authorized share capital, as compared to this, todays authorized share capital is Rs.8168.38 crorers with a provision that the state government of Karnataka, the recommendation of small industries development bank of India, increase the authorized capital to Rs.9102 crores.

Today while the state economy is making rapid strides in the global market. Karnataka state financial corporation is moving in tandem, as a pioneering and responsive financial institution, Karnataka state financial corporation is fine tuned to fulfill the plans and aspirations of entrepreneurs by extending all possible assistance.

Amendments to the SFCs act provide for wide ranging scope of assistance and operational flexibility, keeping this in view, Karnataka state financial corporation has reengineered itself to ensure utmost customer satisfaction with new energy, trust and speed.

In the 50 years of existence, Karnataka state financial corporation has contributed most significantly for the growth of SSI’S, back word areas development and promotion of first generation entrepreneurs, its achievement in these areas is unparalleled. Since inception , Karnataka state financial corporation has assisted more then 1.60 units with cumulative sanction of over Rs. 9102 crores out of which more then 50% is towards SSI’S.

Karnataka state financial corporation an ISO 9001:2000 certified organization proved to have played a major role in the industrial development of the state, it is also the proved privilege of , Karnataka state financial corporation to have assisted many industries that are internationally recognized like the INFSYS and BIOCON.

OBJECTIVES OF KSFC:
The corporation has the been established with the basic objectives of promoting industrial development in Karnataka. KSFC was desired to give particular emphasized small and medium scale industries keeping inline with the IDBI and SIDBI and either specialized institution or the government. It was felt that no industrial project which is due important should not perish due to lack of timely and adequate finance.

QUALITY OF OBJECTIVES:
to ensure satisfaction through team work and professional management,
to extend effective guidance through entrepreneurs for successful accomplishment of their business venture, to provide good quality of service on a continued basis to the satisfaction of the customer To attain specified level. Of performance with statutory and regularly requirement,
To encourage every one in the organization to upgrade and enhance their skill and knowledge with.

MISSION OF KSFC:
To be premier, self sustained financial institution for catalyzing, creating and sustaining viable investment in the small scale and medium sector of industry and services and the financial sectors in the state of Karnataka.

vISION OF KSFC:
to reach and cover the entire state of Karnataka
to suit the knowledge of each region in terms of infrastructure and nature resources industrialization and entrepreneurship,
Specialization in the appraisal, monitoring a recovery of loan of SSI/MSI and other new fund based and fee based activities.
A continuous journey towards the development of SSI entrepreneurs.

FUNCTIONS OF KSFC:
According to sec25 of SFCs act 1951. The function of KSFC includes:

1) Guaranteeing on such terms and conditions as may be agreed upon,
2) Loans raised by industrial concerns, which are repayable within a period not exceeding 20 year’s and floated in the public market.
3) Loans raised by industrial concerns, from scheduled banks or state co-operative banks or other financial institution.

a) Guaranteeing, on such terms and conditions as may be agreed upon deferred payment due from any industrial concerns in connection with its purchase of capital goods within India,
b) Under writing of the issue of stock, shares, bonds or debentures by industrial concerns.
c) Transferring for consideration any instruments relating to loans and advance granted by it to industrial concerns.
d) Acting as agent of the centeral Govt of the state government or the development bank (IDBI) or the small industries banks (SIDBI) or the IFCI limited formed and registered under the companies act,1956 or any other financial institution notified in this behalf by the centeral government in respect of any matter connected with, or arising out of, the grant of loans or advances to an industrial concern, or subscription to debentures of an industrial concern or relating to the business of the development banks, small industrial bank IFCI limited of financial institution.
e) Subscribing to or purchasing of the stock, shares. bonds or debentures of an industrial concern or any other concern.
f) Retaining as part of its assets any stock. Shares bonds or debentures that it may acquire by subscription or in fulfillment of it underwriting liabilities and disposing of the stock, shares bonds or debentures so acquired.
g) Granting loans or advances to or subscribing to debentures of in industrial concern.
h) Accepting or discounting promissory notes and bills of exchange made, drawn, or accepted or endorsed by industrial concerns or by any person selling capital goods manufactures by one industrial concern, to another industrial concern.
i) Undertaking research and surveys for evaluating or dealing with marketing or investments, or undertaking and carrying on techno-economic studies or other activities in connection with the development of any industry.
j) Providing technical and administrative assistance to any industrial concern or any person for the promotion, management or expansion of any industry.
k) Planning and assisting in the promotion & development of industries.
l) Acting as the trustee for the holders of debenture of other securities.
m) Leasing, sub-leasing or giving on hire purchase of industrial plant, equipment, machinery or any other assets.
n) Factoring
o) Providing export related credit and services.
p) Undertaking money market related activities.
q) Setting up of mutual funds and undertaking assets management activity.
r) Promoting, forming or conducting or assisting in the promotion, formulation or conduct of companies, subsidiaries, societies, trusts or such other association of persons as it may deem, fit.
s) Opening or confirming or endorsing letters of credit and negotiating or collecting bills & other documents drawn hereunder.
t) Doing such other business as the small industries bank may otherwise and or generally the doing of such acts and things as may be incidental to or consequential upon, the exercise of its powers or the discharge of duties under the act.
u) Providing constancy and merchant banking services.

AREA OF OPERATION:
Karnataka state financial corporation extends loans to industrial concerns established / to be established in the state of Karnataka. Industrial concerning having registered office out side the state of Karnataka can also avail financial assistance provided the place of business in Karnataka, and they agree to shift their registered office to the state of Karnataka.

Karnataka state financial corporation has branches all over the state, each district has a branch office, in total Karnataka state finance corporation has 7zonal offices, 3 super “A” grade branch offices, 13 “A” grade branches and 14 ”B” grade branches,

MANAGEMENT OF KSFC:
The board of directors constituted as per the KSFC’s Act 1951 assisted by a managing directors executive committee and advisory committee, carries out of the management of KSFC.

BOARD OF DIRECTORS:
The board of directors shall consist of the following namely.

1) A director to be nominated as chairman under sub-sec(1) sec 15, the small industrial banks, in consultation with the state government nominates a directors as a chairman of the board for such period not exceeding three years,
2) Chairman is whole time director unless he is also appointed, to function as the managing director.
3) The chairman presides over the meeting of the board and general meeting of the financial corporation.
4) Two directors nominated by the small industries bank.
5) Two directors, nominated in the prescribed manner by the parties mentioned in clause (c) of sub sec(3) of sec 4,
6) Such number of directors elected, in the prescribed manner, by shareholders other than mentioned in clauses (a) (b) and (c) of sub sec,(3) of sec 4, whose names are entered on the register of shareholders of the financial corporation, ninety days before the date of meeting in which such election takes place an the basis specified in the act.
7) Managing director appointed in consultation with the small industries by the state government, the managing director.
Is a whole time officer of the KSFC
Performs such duties as the board, by the regulations, entrusts or delegate to him,
Holds office for such term not exceeding three years as the state government may specify and shall be eligible for re-appoint

EXCUTIVE COMMITTEE:
The board shall constitute and executive committee consisting of the chairman and managing director, the whole time directors and such other directors as it may be.
The executive committee shall discharge such functions as may be prescribed or as may be delegated to it by the board.
The board may constitute such other committee’s whether consisting wholly of director’s of other person for such purpose as it may think fit,
Subject to such general or special direction, as the board may form to time given, the executive committee may deal with any matter within the competence of the board.

ADVISORY COMMITTEE:
The financial corporation may appoint (one or more committees consisting wholly of directors or wholly of other persons) for the purpose of assisting the financial corporation in the efficient discharge of its functions and in particularly for the purpose of securing that those functions are exercised with due regard to the circumstances and conditions prevailing in and the requirement of particular areas of industries.

QUALITY MNAGEMENT SYSTEM (ISO 9000):
During the fiscal year 1996-97 the corporation has appointed institute of standard engineers (Tata Consultancy Services) as an external agency to advise and co-ordinate in getting the certificate.

Since competitiveness in rate of interest and better customer service are the key factors for development and growth of the corporation.

Therefore, the corporation decided to lowering the rate of interest to attract business and evolve strategies helped the corporation to obtain ISO 9000 certification, preliminary work in this regard was completed and all efforts were being made to get ISO 9000 certification quickly.
Due to continuous efforts and different programs were conducted at all levels the process of getting ISO 9000 certification was completed and the corporation was awarded ISO 9000 certification on 25th may 1998.

The corporation initiated action to obtain ISO 9002 certification for head office for its quality services, the local office of m/s bureau of Indian standards conducted audit may,1998 at head office and recommended for award of certification to the quality management system of KSFC.
The validity of the certificate for 3 years efforts are being put of derive benefit of ISO certification for improvement in quality of service for enhancement of customer satisfaction.

AMMENDMENT TO THE STATE FIANANCIAL CORPORATION ACT:
In a significant development, the state financial corporation act was amended by the parliament in September 2000 with a new to enlarge the scope of activities of KSFC’s to provide more autonomy to them, to restructure and re capitalize the allying KSFC ‘s. and for identification the role and status of KSFC’s in the emerging Indian financial system. Consequent to this the board of KSFC’s was dissolved and a new board is being constituted (under the provision of amended act).

KSFC’s (amendment) act has also provided for higher limit of section unto Rs. 5.00 lakhs per project. In special cases KSFC’s are allowed to section up to Rs.2000 lakhs with the prior approval of SIDBI. Consequent to this delegation of sanctioning powers within the organization was also restructured during the year.

SPECIAL FEATURES OF KSFC:
Team loan over Rs. 40.00 lakhs per processed and sanction at the head office. KSFC extends terms loans to new / existing units up to Rs.500.00 lakhs for corporate bodies and registered co-operative societies. “Terms loan up to a maximum of Rs.200 lakhs are sanctioned to proprietary partnership and joint Hindu family concern.

THE VARIOUS LOAN SCHEMES ARE GIVEN BELOW:
Equipment finance loan scheme
Diesel generator loan scheme
Hospital /nursing homes /medical stores loan scheme
Electro medical equipment loan scheme
Technology development and modernization fund scheme ( TDMF )
Loan scheme for maintenance, development and construction of roads.
Tourism related activities loan scheme
Assistance for acquiring indigenous or imported second had machinery

Qualified professionals loan scheme
Assistance to SSI units for technology development and modernization,
Scheme of assistance for acquisition of ISO 9001:2001 services certification by SSI units, recently introduced -2010-11

Line of credit ( LOC ) for purchase of raw materials from KSSIDC.
Scheme for financing of energy saving projects ( SESP ) for MSME & under JICA line of credit of SIDBI.
Scheme for financing of wine
Manufacturing industries,
Interest subsidy scheme for scheduled tribe entrepreneurs.