Welfare pension crisis deepens: Repayment of ₹6,000 crore loan delayed

Thiruvananthapuram: The repayment of the loan taken by Kerala Social Security Pension Limited (KSSP Limited) for disbursing welfare pensions has been delayed, prompting the government to extend the deadline for returning the amount borrowed from a consortium of cooperative banks.

The ₹6,000-crore loan, taken in three instalments, was due for repayment soon. However, the government has now issued an order renewing the loan for another year at the existing interest rate, with interest to be paid as scheduled.

The order follows a letter from the pension consortium manager requesting a one-year extension on the expired loans. It also states that if any co-operative bank seeks repayment, the loan amount must be returned.

The government has been raising funds for welfare pension distribution through a consortium of primary cooperative banks. The pension company set up for this purpose borrows from the consortium, with each loan carrying a one-year tenure. The borrowing attracts an interest rate of 9.1 per cent.

As per the agreement, the pension company must repay both the principal and interest to the cooperative banks once the loan period ends. However, due to the state’s financial constraints, the borrowed amount has not been repaid on time.

When the welfare pension was recently raised to ₹2,000, the government borrowed an additional ₹2,000 crore from the co-operative bank consortium to cover the distribution. That loan still has one year left for repayment.

The pension company's debt continues to rise as the government has not transferred funds for pension payouts. The company currently holds about ₹13,000 crore in outstanding loans.