In an apparent case of 'red-tapism', a group of six entrepreneurs are being made to run from pillar to post for a loan from the Karnataka State Financial Corporation (KSFC) and even Chief Minister BS Yediyurappa’s intervention does not seem to have worked.
This comes at a time when the state government is going big with ease-of-doing-business reforms.
Documents with DH show that the KSFC, which provides term loans to entrepreneurs, has not released the first tranche to the entrepreneurs even as the state-run agency has done so to 25 other entrepreneurs. All the 31 entrepreneurs are eligible for loans at lower rates as they belong to SC/ST.
Take the case of M Venkatesh, who started Manmanth Industries for which the KSFC approved a loan of Rs 4.25 crore in March 2019. The Karnataka Industrial Areas Development Board (KIADB) allotted a plot for this unit in Avverahalli in Dobbspet. The total cost of the project is Rs 6.45 crore and Venkatesh’s share is Rs 2.20 crore.
Venkatesh is to receive the first tranche of the KSFC loan of Rs 1.12 crore towards the KIADB land and has paid Rs 53 lakh of his share.
According to sources, the KSFC is refusing to part with the loan, asking Venkatesh and other entrepreneurs like him to first pay up their share of the project cost. In Venkatesh’s case, that is Rs 2.20 crore.
"KSFC managing director Ekroop Caur has put on hold the release of loans saying her predecessors had erred. We have been asked to first invest our share for the loans to be released. How come this did not apply to other entrepreneurs," Venkatesh asked. "My plot is 276-B. How is it that the KSFC released the loan amount to my neighbour 276-A? Isn’t this red-tapism?"
Caur, who is also Finance Secretary (Budget & Resources), was unavailable for comment.
In 2018-19, the KSFC approved loans worth Rs 1,098 crore to 1,056 entrepreneurs. Of them, 354 were SC/ST entreprenuers. "Why are only six of us left in the lurch like this," Venkatesh asked.
Yediyurappa, through a note in February 2021, directed the Finance Department under which the KSFC functions to take action. Even Deputy Chief Minister Govind Karjol intervened. There was no respite.
This issue also came up for discussion in the Legislative Council in March 2020. Yediyurappa had assured the House that he would get the loans released immediately. Venkatesh has, once again, approached Yediyurappa with a reminder on his assurance.