Karnataka Minorities Development Corporation (KMDC) Loses NBFC Status

Karnataka Minority Development Corporation which was established to help develop the social, educational, and economical status of the religious minorities in the state and to bring them alongside the forward class communities in the mainstream of society has reportedly lost its NBFC (Non-Banking Financial Companies) status, Vaartha Bharathi reported.

The corporation’s assets and income proportions falling below the minimum prescribed requirement has been cited as the primary reason for the cancellation of the NBFC status, it is learned. The government had reportedly neglected to take appropriate measures to ensure the restoration of the NBFC certification.

The Regional Director of the National Reserve Bank of India had reportedly written a letter to the Chief Secretary of the government on October 25, 2021. (No; DO.FIDD (BG) N. S294/02/03/051/2020-21 DATE 25.10.2021)

Similarly, I. S. N. Prasad, the Additional Chief Secretary to the Government from the Economic Department had written a letter to the Chief Secretary of the government’s Department of Minority welfare, Hajj and Wakf on November 29, 2021 (Letter No; FD-CMM/40/2021). Although RBI had written the letter multiple times, Minister Shashikala Jolle did not take appropriate action in this regard, it is learned.  A note sheet concerning the letter written by the RBI is available for reading at ‘The File‘.

The letter reveals that the Corporation has not shown interest to reinstate the NBFC Status and certification. Before writing a letter in October, the Regional Director of the National Reserve Bank had written another letter earlier dated March 2, 2021. Despite this, the contents of the letter proposed that the Corporation did not undertake necessary action to resolve the issue, it is learned.

The note sheet elaborates that, ‘Due to Karnataka Minority Development Corporation’s non-compliance with the NBFC’s primary business standards and the corporation’s assets, income proportions having fallen below the specified minimum requirements, the corporation has lost its NBFC status.’

The Karnataka Minority Development Corporation was established on February 9, 1986. It is a state-owned enterprise. The corporation which possesses a portfolio of holding crores of rupees in shares is working under the supervision of the Government’s Minority Welfare Department.

This Corporation provides Self Employment Assistance Funding Scheme, Knowledge/awareness, large and small loans, Ganga Kalyana, help in buying agricultural land, the margin on loan for home constructions, Special development of the Christian community, assistance in buying a plot for home, Loan interest assistance on home construction, development of national minority communities and also formulated the schemes for the Financial Corporation.

From the Interim Report of the Minority Welfare Committee of Backward Classes submitted to the Fifteenth Assembly of the Karnataka Legislative Assembly, it was revealed that the Corporation had released 1,068 crore rupees in 2015-2016, out of which 976 crores had been spent. Form the 1,527 crores which were released in 2016-17, 1,424 crores was pent. From the 2,191 crores which were released in 2017-18, 2,116 crores were spent. Under the Knowledge scheme, 330 crores were released in 2017-18, from which 263.94 crores were spent.