Kerala Opposition leader V. D. Satheesan. File
| Photo Credit: The Hindu

Opposition leader V.D. Satheesan has demanded an anti-corruption investigation against the Kerala Finance Corporation (KFC), a public-sector undertaking, for allegedly causing a ₹100 crore loss to the State exchequer by “unlawfully and dubiously” investing in the now liquidated Reliance Commercial Finance Limited (RFCL) at a critical time when the Anil Ambani-owned non-banking financial firm was fiscally ailing.

At a press conference in Thiruvananthapuram on Thursday (January 2, 2025,) Mr. Satheesan said KFC, which the government had tasked with providing medium- and long-term credit to small- and medium-scale undertakings, had invested ₹60.8 crore as Non-Convertible Debentures (NCDs) in RFCL during the 2018-19 period. 

He said KFC’s Asset Liability Management Committee (ALCO) had decided to invest public money in RFCL, ignoring cautionary reports that RFCL was in financial trouble. He alleged that the committee had kept the KFC’s director board in the dark about the investment decision.

Moreover, Mr. Satheesan said KFC had violated the law, which allowed it to invest only in the Reserve Bank or nationalised banks. He said the KFC “wilfully” obfuscated its investment in RFCL without mentioning the private firm’s name in its annual reports available in the public domain.

He said the Reserve Bank of India (RBI) liquidated RFCL in 2019. Since then, RFCL has not honoured the NCDs nor paid the KFC any interest. Mr. Satheesan accused the Left Democratic Front (LDF) government of walking the extra mile to conceal the illegal deal between KFC and RFCL. 

The Finance Department pointedly refused to answer questions about the illicit arrangement posed by the Congress-led United Democratic Front (UDF) Opposition in the Assembly. 

Mr. Satheesan said there was a deep-rooted conspiracy at the apex levels of KFC and the government to invest in the ailing RFCL, possibly for a heft commission, without seeking any guarantee or collateral security. He said the KFC, which inundates struggling small-scale industries with recovery notice, had made no effort to realise its loan to RFCL.

He demanded that the government publish records about KFC’s questionable investments. Mr. Satheesan said the LDF government was towing the Central Government’s line of writing off the loans of loss-making corporations at the public expense.