KSIIDC offers one-time settlement for decades-old loans

Karnataka has now offered a one-time settlement option for those who have defaulted on loans borrowed from the Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC).

Interest for loans of 231 individuals, who owe around Rs 233 crore to the KSIIDC, will be waived as an incentive to get them to repay the loans. Apparently, the loans were “decades-old” and neither the principal nor the interest were paid.

Depending on the dues pending, the state government - vide a Cabinet decision - has decided to waive interest of such loans. The measure is expected to ease the administration of Infrastructure Development Department, which had sanctioned these loans from KSIIDC before the Centre, in 2012, asked such development finance institutions to stop lending.

Speaking to DH, Infrastructure Development principal secretary Kapil Mohan said that while KSIIDC had sanctioned Rs 2,500 crore loan prior to 2012, it had recovered around Rs 2,200 crore loan. However, Rs 233 crore from 231 cases are yet to be paid back due to a wide range of factors.

Those who defaulted included agri-based small industries in North Karnataka which shut shop, investors who died prematurely, among others. According to Mohan, the loans are pending for the past decade and a half. “Since KSIIDC has stopped disbursing loans, it is not economically feasible for the Department to maintain a staff to oversee these old loans. That is why the government has offered a one-time settlement option,” he said.

This is not the first time the government has offered the one-time settlement option. In 2003 too, the then state government had launched such an initiative and had recovered Rs 471 crore from 463 cases.