THIRUVANANTHAPURAM: Investors were caught in a fix after the Reserve Bank warned about cancelling the license of the Kerala Transport Development Finance Corporation, which is currently mired in an unprecedented financial crisis.

If the government does not take over the debt, KTDFC will lose its credibility. The officials also fear a mass withdrawal of investment. Many other loans guaranteed by the government will also be affected. A lot of retired IAS officers and large companies have invested in KTDFC over the years. KSRTC borrowed most of the investment from KTDFC with the government as the guarantor. But no money got repaid back and the government failed their promise, resulting in the downfall.

Around 350 investors had approached the Ombudsman of the Reserve Bank to get their money back. The Reserve Bank had issued a stop memo forbidding the operation, realizing a huge gap between investment and assets. This is the first step in revoking the license. Concerned investors have approached the High Court.

Rs 400 crore is required to repay the overdue deposit alone. Yesterday, when the petition of Laxminath Trade Link Private Limited of Kolkata came up for consideration, KDTFC sought a three-week time for explanation. The court also criticized KTDFC for treating the investors as creditors. Later, the court allowed two weeks’ time for KTDFC to come back with a proper explanation. Lakshmi Nath company has more than Rs 30 lakh to recover from KTDFC.

According to an earlier government order, 90 per cent of the loan was given to KSRTC without any collateral. KTDFC demanded that the government pay this money, but the finance ministry paid no heed to the concern. The finance department called a meeting in March to refund the investors. A schedule was also prepared for payment in June, but no further action was taken.

Over the years:

1. Formed in 1991 with a capital of 50 crores to support KSRTC. KTDFC provided low-cost vehicle loans and home loans to government employees that slowly turned a profit.
2. More than Rs 2200 crores in loan was given to KSRTC and crores were spent on building commercial complexes under the B.O.T system. The crisis started when the loan was not repaid on time.
3. In 2018, the Left Alliance government formed a banking consortium led by SBI and shifted the loan liability of KSRTC to the bank. KTDFC met trouble after the bank took away a lion’s share of KSRTC's income.