Two-decade loan tussle ends: Kerala resolves KSRTC-KTDFC debt row

The Government of Kerala has written off a debt of Rs 436.49 crore stemming from a longstanding financial dispute between the Kerala State Road Transport Corporation (KSRTC) and the Kerala Transport Development Finance Corporation Ltd. (KTDFC). The dispute, which dates back to 2001, had strained both entities, KSRTC due to defaults on loan repayments, and KTDFC for carrying non-performing assets on its books.

Significant discrepancies had emerged in the financial records of both organisations regarding the loan transactions. KSRTC had failed to make several scheduled repayments, while KTDFC, as a financial institution, had accrued considerable interest, compounded interest, and penalties over time.

Recently, the state government released Rs 625 crore to KTDFC. Following this, KTDFC submitted a claim which covered the accrued interest, penalties, and related charges. Of this, the Cabinet has now formally written off Rs 436.49 crore, effectively settling the debt and restoring KTDFC’s financial books to a debt-free status.

This decision is expected to ease future financing options for KSRTC. The transport corporation is currently seeking a loan of Rs 250 crore from Kerala Bank. Previously, Kerala Bank had been unable to extend fresh credit to KSRTC due to its unresolved debts.

KTDFC was originally created by the state government to provide financial assistance specifically to KSRTC. To do so, it borrowed funds from external financial institutions and disbursed them to KSRTC. Between 2001 and 2017, KTDFC had issued over 18 short-term loans to the transport corporation. However, disputes over repayment terms arose, and even the state’s financial audit departments were unable to resolve the matter conclusively.