REASONS BEHIND UPFC’S FALL

1-According to a report of Industrial Financial Corporation of India (IFCI) 2012, the government had an income of ₹4000 crore per annum from the industries set up by the UPFC but the government did not take any initiative for the repayment of the loans.

2-Under the government’s Industrial Development Scheme, UPFC sanctioned interest free loan of about ₹700 crore to 16 industrial units due to which it incurred ₹84 crore per annum interest loss.

3-From 1984 to 1990, the government started a new scheme of giving loans to industrial units without taking any security from them. Most of the industries which availed the facility became non-performing assets (NPA). Consequently, the government exempted the industries from repaying the loan amount which put the UPFC into heavy losses.

4- The UPFC gave loans up to ₹3200 crore, out of which loans of up to ₹2900 crore were recovered. On unrecovered loan of ₹300 crores, the UPFC had to bear the burden of paying interest to the financer bank and incurred heavy losses.

5-The government did not pay its share capital to the UPFC since 2001 and hence the UPFC reached to the present state of affairs, said a senior officer of the UPFC pleading anonymity.