Govt to waive interest to recover PSIDC’s loans : The Tribune India

Join Whatsapp Channel

Govt to waive interest to recover PSIDC’s loans

CHANDIGARH: The state government is all set to bring a one-time settlement (OTS) scheme for the loanees of the Punjab State Industrial Development Corporation (PSIDC) wherein a major portion of the interest component will be waived.



Ruchika M Khanna

Tribune News Service

Chandigarh, August 1

The state government is all set to bring a one-time settlement (OTS) scheme for the loanees of the Punjab State Industrial Development Corporation (PSIDC) wherein a major portion of the interest component will be waived. But the government’s loss-making corporation will be able to recover barely 9 per cent of its total losses.

While the policy will be applicable to all those loss-making industrial units who have defaulted in repaying loans to the PSIDC, the profit-making companies or profit-making sister concerns of the defaulters can avail the OTS only after their case has been examined and approved by a Cabinet sub-committee, which will be formed to look into cases of those industrialists, who despite making huge profits have defaulted on repaying loans.

Sources in the industry and finance departments have confirmed that the policy is ready and will be presented before the state Cabinet, which meets on Monday, for its final approval.

The government is hoping that of Rs2,100 crore default in loans, the new policy will help recover over Rs200 crore. The total accumulated loss of the PSIDC is estimated at Rs7,300 crore. A roadmap for getting the PSIDC out of the financial mess is also being considered wherein another Rs300 crore could be mopped up through liquidation and disinvestment of companies owned by the PSIDC and sale of some of its fixed assets.

It is learnt that the Industry Department had proposed that all those opting for the OTS policy would be asked to pay a much smaller rate of interest (10- 12 per cent) than levied on them at the time of loan disbursal (18-24 per cent). This was done to make the OTS more attractive for defaulters and ensure higher recovery of dues. However, the Finance Department has shot down this proposal and said the new rate of interest would be applicable only from the date when the loanee went into default.

“We were apprehending that in case the lower rate of interest was levied right from the beginning of the loan account in this OTS, the recovery would be negligible. Thus, we decided to change the original proposal,” said a source in the Finance Department.

Under the new scheme, defaulters would be categorised in various groups based on tangible collateral security given by them at the time of availing loans. While some defaulters, who had given a tangible security, will be charged 12 per cent interest, others (who had not given any tangible security) will be charged 10 per cent interest.

Corporation’s business model 

The PSIDC ran into losses following its failure to recover loans extended to select top industrialists of the state. It disbursed loans till 1999. The corporation’s business model was to take a loan from IDBI and refinance it at a margin of 2% to industrialists
 
Not the first to waive interest 
 
This is not the first time that a state-owned financial corporation is waiving interest to recover dues. The Punjab Financial Corporation has waived interest worth Rs 899.54 crore to be recovered from 782 industrial units in the past four years

Top News

Arvind Kejriwal to be produced before Delhi court today as 6-day ED custody ends

Excise policy case: Delhi court extends ED custody of Chief Minister Arvind Kejriwal till April 1

In his submissions, Kejriwal said, ‘I am named by 4 witnesse...

Delhi High Court dismisses PIL to remove Arvind Kejriwal from CM post after arrest

Delhi High Court dismisses PIL to remove Arvind Kejriwal from CM post after arrest

The bench refuses to comment on merits of the issue, saying ...

‘Unwarranted, unacceptable’: India on US remarks on Delhi CM Arvind Kejriwal’s arrest

‘Unwarranted, unacceptable’: India on US remarks on Delhi CM Arvind Kejriwal’s arrest

MEA spokesperson says India is proud of its independent and ...

Bullying Congress culture, no wonder being rejected: PM Modi, backs senior lawyers who flagged attempts to undermine public trust in judiciary

Bullying Congress culture, no wonder being rejected: PM Modi

Backs senior lawyers who flagged attempts to undermine publi...

Gujarat court sentences former IPS officer Sanjiv Bhatt to 20 years in jail in 1996 drug case

Gujarat court sentences former IPS officer Sanjiv Bhatt to 20 years in jail in 1996 drug case

Bhatt, who was sacked from the force in 2015, is already beh...


Cities

View All