JKEDI illegally refinances defaulters on verbal orders

Fayaz Bukhari
Srinagar July 31: Jammu and Kashmir Entrepreneur Development Institute (JKEDI) is refinancing the defaulters of Youth Start-up Loan Scheme (YSLS) in the State at the cost of genuine entrepreneurs despite having no rehabilitation policy for the units sponsored by the Institute.
The JKEDI has given the NMDFC loans to over 70 beneficiaries since 2016 on the verbal instructions of the Director on the pretext of having defaulted due to floods or unrest in Kashmir.
A fitness trainer from Shah Hamdan Colony Zakura in Srinagar, was given loan of Rs 8 lakhs under YSLS (TL-2) for the establishment of a BPO- under IT&ES sector. After he defaulted, he was illegally provided another loan of Rs 11 lakh under NMDFC (Account no: 3781) for gold jewelry shop at Hari Singh High Street, Srinagar, and his previous loan default amount of Rs 5.87 lakhs (without interest) was adjusted from the second loan.
The Executive Manager of the JKEDI while recommending the case (on 19-08-2107) clearly stated that there is no such Government policy for rehabilitation but the case was considered on verbal instructions of the Director. “The beneficiary made a personal representation to the Director for the rehabilitation of his unit which had been damaged during the floods of September, 2014. The impact of the floods has severely impacted the revenue generation from the said unit. It was verbally directed by the Director to rehabilitate the case since there was no rehabilitation policy in place from the Government till date for the units sponsored by the Institute”, the Executive Manager wrote.
A BUMS doctor of Firdous Colony Buchpora was given loan, initially covered under Seed Capital Finance Scheme (SCFS), for her fitness centre – M/s Shafi Fitness Centre at Baghat Barzulla in Srinagar –  with the project cost of Rs 21.50 lakhs with Rs 7.50 lakhs non-refundable seed capital. She was later additionally provided loan to the tune of Rs 3 lakhs under NMDFC (TL-934) “as a special case”. She, however, defaulted and was again given a loan (Tl-3647) to the tune of Rs 21 lakhs and the previous loan default amount of Rs 3  lakh was adjusted from the new loan.
A woman entrepreneur was provided loan of Rs 8 lakh under YSLS scheme (TL Account No: 221) for starting a preparatory school for kids at Usmania Colony Bagh-e-Mehtab and later changed her business to the sale of spices. She defaulted, saying that she suffered losses due to 2014 floods. As the recovery team of the JKEDI approached her for repayment of default amount, she made representation to the Director for another loan.
“However, the beneficiary made a personal representation to the Director submitting that her unit may be enhanced/rehabilitated as the same was damaged during the floods of September, 2014 resulting in financial losses to her unit. It was verbally directed by the Director to rehabilitate the beneficiary to help her to re-establish her unit”, wrote ((16-09-2017) the Executive Manager of the EDI while sanctioning the case.
She was illegally provided second loan to the tune of Rs 10 lakhs under NMDFC bearing (LT Account No3943) for starting another project-Whole Sale of Electronic items- and the default amount of the previous scheme was adjusted and the account was closed.
Under the NMDFC, the EDI has given loan to the tune of around Rs 150 crore and under YSLS it has disbursed around Rs 70 corers loan with over 15 percent default in both the schemes. This is happening as the employees, as per sources, are forced to give loans recklessly without ascertaining credibility of the beneficiaries.
However, Director JKEDI, Dr M I Parray, on refinancing of defaulters said: “We can refinance entrepreneurs who have suffered damages or were unable to repay loans due to a natural disaster (floods) or a prolonged law and order issues. We can refinance them under credit line 2 scheme with slightly higher interest rates”.
He further said: “We penalize the willful defaulter. A willful defaulter has to pay @ 12% and if the beneficiary has suffered losses due to a disaster then we give him more money to start the business.”
Sources said that the NPAs are increasing day by day and instead of addressing the mess, the bad debt are allowed by the higher ups. They said that the bad debts are increasing at an alarming rate and State Government is providing guarantee to the NMDFC on behalf of the EDI to take the loan from it without ascertaining the health of the loans obtained from time to time. They said that State Government guarantees can be forfeited any time as the EDI is not in a position to return the loan along with the interest to the NMDFC.
Sources said the employees are forced to make recoveries of loan money by adapting illegal means like threats and intimidation. “The loans are being granted without checking the credentials of the loanee. Some of the employees of the EDI on recovery duty had been beaten by the beneficiaries. Instead of adopting legal means of recovery employees are forced to adopt illegal means by the authorities and they are often threatened with withholding of salary, forfeiture of increments and in some cases their termination on flimsy grounds”, sources added.