1.

1 INTRODUCTION
The Kerala State Financial Enterprises Limited, popularly known as KSFE, Is a Miscellaneous Non-
Banking Finance Company, fully owned by the Government of Kerala. It is one of the most profit-
making public sector undertakings of the State. It is formed with the objective of providing an
alternative to the public from the private chit promoters in order to bring in social control over the
chit fund business from the clutches of unscrupulous fly-by-night chit fund operators. KSFE has been
registering impressive profits every year, without fail since its inception. This organization study is
carried out at KERALA STATE FINANCIAL ENTERPRISES, Thrissur. It provides an excellent
opportunity to understand the real time working of an organization. The study is carried out for a
period of 30 days. This internship helped us to understand the different tasks of managers and their
work style. It also provide an opportunity to interact with employees of the organization and closely
examine their work. This study has been carried out to get an overview of the structure and
functioning of the organization mainly. The study was undertaken to get an exposure to the
functioning of different departments of the company and it helped to interact with the managers of
different departments and other employees in work place.

The Report consists of mainly 3 parts which includes Industry Analysis, Company Profile and related
project work done in the firm. Industry analysis provides an overview of Nonbanking financial
institutions and Miscellaneous Banking financial institutions in detail. Competitive forces in the
industry, key growth indicators in the sector, latest market trends and its impacts are also included in
the study. Company profile includes the organization structure, roles and responsibilities of
managers, department analysis, product line and financial status of the firm. Part 3, consists of project
work related to the CSR activities of the firm. CSR if done in proper way and marketed widely can
be a competitive advantage for the firm. Various aspects of CSR policies and CSR reports are studied
to understand the different engagements of the firm.

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1.2 OBJECTIVES OF THE STUDY

➢ To explore the importance of miscellaneous Non-Banking Institutions and their functioning.

➢ To study the organization structure and the roles and responsibility of each individuals
working in the company.
➢ To understand how the key business processes are carried out in the organizations given their
competitive environmental realities.
➢ To develop a fair understanding of a current and operationally relevant problem that needs
managerial attention.

1.3 SCOPE & LIMITATIONS OF THE STUDY

The following bulletin points will describe the important ―SCOPE‖ of the project conducted:

➢ The data for this project is collected from internet and from KSFE, Thrissur branch.
➢ The report examines the Non-Banking Financial Industry development, existence and growth
in domestic environment.
➢ To understand and to describe about the working of a financial company.
➢ This study will elaborate the CSR policy adopted by KSFE and the various activities carried
out by the committee.
➢ Unable to obtain the most recent data.
➢ Many of the respondents were busy and they allowed only limited time for the interview.
➢ Inability to obtain confidential data
➢ Absence of enough journals and publications about the firm

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RESEARCH METHODOLOGY
This report is based on both primary & secondary data collected from the company.

 Primary data
The primary data was obtained by:
 Direct observation
 Through Interview
 Secondary data
The secondary data is the second hand data collected from books and the other sources and
this includes:
 Journals & magazines
 Existing records in the company
 Published documents
 Website of KSFE

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 PART I

INDUSTRIAL ANALYSIS

4
2.1 INTRODUCTION TO NBFC

NBFCs have been playing a complementary role to the other financial institutions including banks in
meeting the funding needs of the economy. They help fill the gaps in the availability of financial
services that otherwise occur in the unbanked & the underserved areas. NBFCs account for 12.3%
assets of the total financial system. An NBFC is defined in terms of Section 45I(c) of the RBI Act
1934 as a company registered under the Companies Act 1956 engaged in granting loans/advances or
in the acquisition of shares/securities, etc. or hire purchase finance or insurance business or chit fund
activities or lending in any manner provided the principal business of such a company does not
constitute any non-financial activities such as (a) agricultural operations (b) industrial activity (c)
trading in goods (other than securities) (d) providing services (e) purchase, construction or sale of
immovable property. The NBFC segment has witnessed considerable growth in the last few years and
is now being recognised as complementary to the banking sector due to implementation of innovative
marketing strategies, introduction of tailor-made products, customer-oriented services, attractive rates
of return on deposits and simplified procedures, etc. NBFCs have been at the forefront of catering to
the financial needs and creating livelihood sources of the so-called unbankable masses in the rural
and semi-urban areas. Through strong linkage at the grassroots level, they have created a medium of
reach and communication and are very effectively serving this segment. Thus, NBFCs have all the
key characteristics to enable the government and regulator to achieve the mission of financial
inclusion in the given time.

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2.2 TYPES of NBFI

The extremely diverse set of entities in the Non-Bank Finance Institution (NBFI) universe and their
respective regulators are shown below:

Figure.1 NBFI Universe

As depicted above, RBI classifies NBFCs into ten categories namely Asset Finance
Companies(AFCs), Loan Companies(LCs), Investment Companies (ICs), Infrastructure Finance
Companies(IFCs), Core Investment Companies(CICs), Infrastructure Debt Funds (IDF-NBFCs),
NBFC-Microfinance Institutions (NBFC-MFIs), Factoring companies(FCs), Mortgage Guarantee
Companies (MGCs) and Residuary Non- Banking Companies(RNBCs).

NBFCs have been classified on the basis of the kind of liabilities they access, the type of activities
they pursue, and of their perceived systemic importance.

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Liabilities based classification

Category ‗A‘ companies, (NBFCs having public deposits or NBFCs-D), Category ‗B‘ companies,
(NBFCs not having public deposits or NBFCs-ND).

Activity Based Classification

Loan Companies (LCs),Investment Companies (ICs), Asset Finance Companies (AFCs),

Infrastructure Finance Companies (IFCs) and Systemically Important Core Investment Companies
(CICs-ND-SI).

Size Based Classification

non-deposit taking NBFCs with assets of Rs. 100 crore and above were labelled as Systemically
Important Non-Deposit taking NBFCs (NBFCs-ND-SI), and prudential regulations such as capital
adequacy requirements, exposure norms along with, reporting requirements were made applicable to
them.

2.3 MISCELLANEOUS NON BANKING COMPANIES

KSFE – A Miscellaneous Non-Banking Company

Figure 2.Classification

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Directions by RBI known as the ―Miscellaneous Non-Banking Companies (Reserve Bank)
Directions, 2016‖.:

(1) Collecting whether as a promoter, foreman, agent or in any other capacity monies in one lump
sum or in installments by way of contributions or subscriptions or by sale of units, certificates or
other instruments or in any other manner or as membership fees or admission fees or service charges
to or in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement by
whatever name called, and utilizing the monies so collected or any part thereof or the income
accruing from investment or other use of such monies for all or any of the following purposes-

(a) giving or awarding periodically or otherwise to a specified number of subscribers as determined

by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of
the prize or gift is under a liability to make any further payment in respect of such scheme or
arrangement;

(b) refunding to the subscribers or such of them as have not won any prize or gift, the whole or part
of the subscriptions, contributions or other monies collected, with or without any bonus, premium,
interest or other advantage, howsoever called, on the termination of the scheme or arrangement, or,
on or after the expiry of the period stipulated therein;

(2) managing, conducting or supervising as a promoter, foreman or agent of any transaction or

arrangement by which the company enters into an agreement with a specified number of subscribers
that every one of them shall subscribe a certain sum in instalments over a definite period and that
every one of such subscribers shall in his turn, as determined by lot or by auction or by tender or in
such other manner as may be provided for in the agreement be entitled to the prize amount;

3) Conducting any other form of chit or kuri which is different from the type of business referred to
in sub-paragraph (2) above;

(4) undertaking or carrying on or engaging in or executing any other business similar to the business
referred to in sub-paragraph (1) to (3).

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2.4 COMPETITIVE FORCES

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every
industry, and helps determine an industry's weaknesses and strengths. Frequently used to identify an
industry's structure to determine corporate strategy, Porter's model can be applied to any segment of
the economy to search for profitability and attractiveness.

Barriers to entry: Low

● Licensing requirement: The licensing requirements of RBI for NBFCs are not that stringent as
compared to the banks. There are already 12159 registered NBFCs while there are only around
180 banks in India.
Bargaining power of consumers: High

● Many alternatives: The consumers have got many alternatives for availing credit.
● Large number of NBFCs: The consumers have a large spectrum to choose from.
Threat of substitutes: Moderate

● Banks: NBFCs were actually created by the government of India as it felt the need to provide
banking facilities to the poor and underprivileged who could not get access to banks. Thus banks
are a perfect substitute for NBFCs.
● Unorganized money lenders: The unorganized money lenders have a strong presence in the rural
markets. They pose a big threat to the NBFCs in the rural areas.
Bargaining power of suppliers: High

● Many alternatives: The suppliers in this case are the depositors or the NBFC‘s funds. The
suppliers have many alternatives at their disposal to invest their money depending on their risk
appetite. Eg: High risk: stocks, low risk: banks
Intensity of rivalry: High

● Undifferentiated services: The service offerings by NBFCs are almost the same. Thus there is a
low level of service differentiation.
● Marketing strategies: Due to the increased rivalry among the NBFCs, there has been use of
aggressive selling & intensive marketing strategies by the companies to gain the market share.

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 Figure 3.Porters 5 forces model

2.5 KEY GROWTH DRIVERS

1. Growing per capita income

Rural wage growth is increasing, which will rural growth. Also, good monsoons last years and the
current general elections will increase spending in rural areas. This in turn may lead to growth in
vehicle and gold loans from NBFCs.

2. Growing consumer credit market

Consumer credit market is promoted to increase by 67% from 2013 to 2020.

3. Product innovation

NBFCs are building organized pre-owned CV (commercial vehicle) segment, which is largely
untouched by banks. NBFCs also finance more than 80 % of equipment leasing and hire purchase
activities in India. They currently have 70% market share in CV finance.

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Another example of product innovation was creation of an Islamic banking NBFC firm in Kerala last
August.

4. Product customization

NBFCs structure monthly installments while accounting for the seasonality of cash flows in
construction equipment loans.

5. Use for fostering financial inclusion:

Focus of NBFCs is on rural segment, Small and middle enterprises (SMEs) and Microfinance NBFCs
constitute almost 76% of the Rs. 120 billion microfinance industries in India. NBFCs have a large
rural network. The sector has been recognized as complementary of banking system by introducing
diversification in the financial sector, simplified sanction procedures, flexibility and timeliness in
meeting the credit needs.

Figure 4.Segment share

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2.6 IMPACT ANALYSIS

NBFCs are already game changers in areas of financial inclusion, especially micro finance,
affordable housing, second hand vehicle finance, gold loans and infrastructure finance. NBFCs can
play a vital role going forward, in closing the loop as regards financial inclusion for individuals and
MSMEs. As regards individuals, NBFCs can reach various financial products offered by the
securities industry, viz., shares, mutual funds, depository services etc., as also insurance products
both life and non-life together with their current product offerings. As regards MSMEs, NBFCs can
become game changers by providing factoring and bill payment service which are of critical
importance at the present juncture.However, the new banks and the invitation of foreign banks into
the Indian banking system (by allowing the wholly-owned subsidiary of foreign banks to acquire
domestic private sector banks as well as set up branches anywhere in the country) will increase
competition for NBFCs in rural areas, where they enjoyed unrivalled dominance.

NBFCs have a special responsibility against the background of the need to improve the customer
service by conducting their operations as per the best practices of corporate governance. In the
ultimate analysis, adhering to best corporate governance and ethical practices is the only way for
gaining the confidence of their customers in particular, and the society in general. Consequently, the
NBFC sector would be able to garner greater trust of both its customers and the society. That would
provide the springboard for increasing their business levels in the process of fulfilling their role as
game changers in the areas mentioned above. NBFCs becoming true game changers would be a
sweetener for financial inclusion efforts in our country.

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 PART II

COMPANY PROFILE

13
 KSFE

TYPE : PUBLIC SECTOR

OWNED BY : GOVT. OF KERALA

FOUNDED : 6TH NOV. 1969

HEAD OFFICE : TRICHUR

NO. OF BRANCHES : ABOVE 415

CHAIRMAN : Adv. PEELIPOSTHOMAS

MANAGING DIRECTOR : A.PURUSHOTHAMAN

INDUSTRY : FINANCE

PAID UP CAPITAL : 100 CRORES COVERED

BUSINESS TURNOVER : 33801 Cr( on sept.2017)

EMPLOYEES : 6782

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3.1 ORIGIN

In 1967, The Government of Kerala took a policy decision to the effect that Chitties should be
conducted under state auspices as a means for the collection of small savings. The then Finance
Minister, in his budget speech for the financial year 1967-68 made the following announcement on
the floor of the Kerala Assembly. "I view this decision as a bold step forward along the path towards
socialism, aimed at bringing banks and other financial institutions under social control" 2. As the
follow-up, the Government of Kerala, appointed a Special Officer in the year 1967, to look into the
feasibility and desirability of starting Chit Funds in the public sector and also to prepare a
comprehensive scheme for starting Chits under government control 3. One of the objectives of
starting Chit Funds in the public sector was to control the mushroom growth of private Chit Funds
and to restrain their growth by offering effective competition. The Special Officer, who presented his
Report on 7th October 1967, recommended strongly the entry of the Government into the field of
Chits. Though the recommendation was for conducting Chit as an adjunct of the Registration
Department, the Government took a different view and decided to bring within its purview and
control, not only Chitties or Kuries, but also certain other financial transactions for which
socialization was felt necessary. Accordingly the Government decided to organize a public sector
undertaking with the name "The Kerala State Financial Enterprises Ltd." (KSFE) for the purpose of
conducting Chits, hire purchase and insurance business under Government control. This apart, the
Government of Kerala had a progressive vision for generating non-revenue income through such
public sector ventures. Thus, KSFE Ltd. was incorporated as a Government Company on 6th
November 1969 with its Head Office at Trichur with the objective of serving as a discipline factor to
private Chit Funds". The first Board of Directors s was constituted as per G.O. (Rt.) 4876/69/Fin
dated 26th November 1969. KSFE comes under the group of Miscellaneous Non-Banking Financial
Intermediaries. KSFE has the unique status of being the only public sector undertaking in India,
which runs Chits and also one of the few profit making companies owned by the Government of
Kerala

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3.2 CAPITAL STRUCTURE OF KSFE

The KSFE Ltd. is fully owned by the Government of Kerala. The Company, which started in a
humble manner with a paid up capital of Rs. 2 Lakh in 1969, has now grown to Rs.300 Lakhs with a
capital structure of 3,00,000 shares of Rs. l 00/- each fully subscribed by the State Government. The
other main resources on which the Company finances its various schemes are:

1. Loans from the Government of Kerala

2. Deposits from the public and

3. Funds ploughed back from profit.

3.3 SCHEMES OF THE COMPANY

Beginning with Chits, the Company has over the years introduced several attractive schemes to cater
to the needs of different classes of people. It mainly mobilizes savings by instruments like Chits and
deposit schemes and channelizes them to acquire house and household durables, motor vehicles,
equipment for self-employment and provides finance for augmenting working capital needs of small
traders. The main schemes of the Company as of now are:

I. Chit scheme

2. Passbook loan

3. New Chitty loan

4. Hire purchase scheme

5. Hire purchase (House modernisation scheme)

6. Employment oriented hire purchase scheme

7. Gold loan scheme

8. Trade financing scheme

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9. Fixed deposit scheme

10. Sugama deposit scheme

11. New fixed deposit loan scheme

12. New housing finance scheme

13. Reliable customer loan

3.4 OBJECTIVES OF THE COMPANY

The objectives of the company are listed in the Memorandum of Association of the company. The
important objectives are as follows:

● To start, conduct, promote, manage and carry on the business of chitties in India or elsewhere.
● To promote, undertake, organize, conduct, manage and carry on the business of general and
miscellaneous insurance of any kind in India or else where.
● To start, promote, conduct, operate, carry on and manage the business of dealers, agents and
traders under the hire purchase system of articles, vehicles, machinery, materials, goods and
tools of all capital goods and consumer goods and property of all nature and description for
personal, domestic, office, commercial, industrial and community use and consumption as a
business of the Company or as agents of the government, state or central or anybody or
organization, there-under or of any other Company..
To start, promote, conduct, operate, carry on and manage the business of dealers, agents and traders
under hire purchase system of articles, vehicles, machinery ,materials goods and tools, of all capital
goods and consumer goods and property of all nature and description for personal, domestic, office,
commercial, industrial and community use and consumption as a business of the Company or as
agents of the Government, State or Central or anybody or organization there under or of any other
Company. Besides these objects, there are many other objects, which is incidental or ancillary to the
main objects such as to advance, deposit with or lend money, securities, property or to receive loans
or grants or concession of any nature or deposits from Banks, Government or Governmental
organizations or others.

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3.5 VISION OF THE COMPANY

The vision of Kerala State Financial Enterprises is to become a significant player in the financial
services sector by:-

➢ Providing a whole range of quality services and products.

➢ Adopting technology and benchmark standards in customer service and performance.
➢ Spreading our wings beyond the borders of Kerala, on a global level.
➢ Retaining the pre-eminent role in Chitty business.
➢ Continuing focus on extending resources to the Govt. of Kerala.
➢ Sustaining commitment to the weaker sections of society, as the neighborhood institution for
support, trust and security

3.6 MISSION OF THE COMPANY

■ To be leaders in our chosen segments.

■ To be Customer Centric- SERVING the FRONT Line.
■ To build a strong relationship with our employees, our customers and stake holder.
■ To be of service to the community in which we work and live in.
■ Empowerment of women
■ To be a GREAT place to work
■ To be a trusted, respected, nationwide, world class full service MNBC

3.7 FINANCIAL PERFORMANCE

At present KSFE has a turnover of 33801Cr. .Started with a paid up capital of 2 lakh company has
reached to the landmark 100 crore in a span of 49 years. The growth of the company in the recent
years are consolidated in the below table.

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 Table 1.Financial performance

Graphical representations of the data are shown below:

Figure 5.KSFE Loans

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 Figure 6. KSFE Deposits

Figure 7.KSFE Aggregate business

3.8 ORGANISATION CHART

The organizational set up is a three-tier system from its very inception. with the Head Office as the
top controlling and coordinating body, the Regions constituting the intermediary level, coordinating
and controlling all the activities of the various branches under them and the branches at the base level
as profit generating centers

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 Figure 8.Organisational Structure

At the Head Office, the activities are grouped on functional as well as product basis under the control
and supervision of the Managing Director. The management of the Company has been vested in the
Board of Directors constituted by the Governor from time to time. The number of Directors shall not
be less than two and shall not be more than fifteen. The Governor may from time to time appoint two
Directors, other than the Managing Director as Chairman and Vice-Chairman of the Board and
determine the period for which either of them will hold his respective office. The Board of Directors

21
as on November 2002 includes the Chairman, Managing Director and three other Directors holding
the office as Additional Secretary (Taxes), Joint Secretary (Finance) and Inspector General of
Registration

3.9 DUTIES AND RESPONSIBILITIES

Duties and responsibilities of Branch manager:-

 He will responsible for the environment within the units in which his subordinates work and
will create conditions conductive to effective work.
 To prepare a master plan outlining the proposed activities with the objectives to be attained in
accordance with the policies of the organization and forward it to the head office each year to
enable the company to prepare a realistic budget every year.

In addition to the implied duties he will have the following specific functions…..

To do all the basic tasks of the Manager, such as;•

 To plan the operations of his subordinates, organize, integrate, control land co-ordinate their
activities for maximum contribution to the Branch Manager as head of financial unit.
 To post proper persons to various positions in the Branch, train and develop them to
accomplish their task effectively.
 To organize their role relationship to start chitties conforming to the pattern prescribed by the
Head Office and achieve the targets fixed by the Company;
 To issue advertisements, if necessary, directly to the local dailies with the approval of the
Regional Manager.
 To perform the duties and to exercise the rights of the foreman under the relevant provisions of
the Acts relating to the chitty.
 To receive proxy form on behalf of subscribers enter the details in the register prescribed, to
file the proxy forms chitty-wise, and to be responsible for the proper inclusion of their names
in the auction/ draw.

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 To keep correct minutes of the proceedings of every auction and drawings, sign the minutes on
behalf of the foreman and to file a true copy of the minutes with the Registrar on the due date.
 To take steps for the payment of the amount due to the defaulting subscriber on the due date.
 To demand in writing, consolidated payment of future subscription from defaulting subscriber
on the due date.
 To prepare a separate Annual Balance Sheet for each chitty and to take steps for the audit
of such balance sheets and filing of copies with the Registrar at the appropriate time.
 To initiate timely action under R.R. Act to collect defaulted subscriptions or other dues
recoverable, wherever necessary.
 To send intimation cards indicating the amount due for the next installment to the subscribers/
banks having standing instructions from the subscribers, timely.
 To send recovery schedules to the drawing / disbursing officers in respect of subscribers who
have joined our salary deduction scheme and to ensure the remittances so received are duly
entered in the books of accounts promptly.
 To develop chitty business of the branch by starting chitties timely and attain the budgeted sale
of business.
 To verify the correctness of the entries in the Money orders Register, sign the Money order
forms, and to receive the Money order, on behalf of the Company.
 To ensure that all the amounts received by Money order on the day have been duly
acknowledged by the cashier.
 To ensure that the day-to-day accounts in the Units are written up on a current basis
and satisfactorily maintained.
 To be responsible for the proper identification of the subscriber and of his acknowledgements
on the documents, payment voucher, cheque counter foil, personal ledger folio etc and hand
over the cheques to the parties concerned.
 To be responsible for the safe keeping of all the documents relating to the payment of
prize money/ removed subscribers contribution
 To reconcile the Bank accounts, Head Office Current Accounts and Regional Office Current
Accounts.
 To arrange for the preparation of subscribers personal ledger schedules and their tallying with
control accounts.

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 To schedule payment of prize money in such a way that they are more or less evenly
distributed over the month, also taking into account the ways and means position and giving
priority of payment based on the date of receipt of surety/security applications and subsequent
execution of documents.
 To transfer funds to the Regional Office within the date stipulated towards
 Other Branch collections
 Salary deduction
 Share of tax and Head Office administration overheads
 To deposit the entire collections of a day in the bank the same day or on the morning of the
next day.
 To check occasionally and ensure that the employees have already performed their assigned
duties (including carrying out checking procedure) satisfactorily;
 To build up and enhance the reputation of the Company in its dealings with the subscribers
and prospects, fostering friendliness with the general public projecting always the good image
of the Company so that we may merit a reputation of our own for the quality of service;
 To be responsible for the proper maintenance and updating of
(a) Personal files of all employees in the Unit
(b) Service records/books) Loans, advances and their repayments

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Duties and responsibilities of the Assistant Managers:-

Assistant Manager/Deputy Manager will be the front line supervisor in the Officers‘ Cadre
who will discharge the following duties, functions and exercise the following powers and report
direct to the Unit Head. To do all the basic tasks of the front line supervisor, such as:
a) To plan the operations of his subordinates organize, integrate, control and co-ordinate their
activities for maximum contribution;
b) To post proper persons to the various positions under his control, train and develop them to
accomplish their task effectively;
c) To organize their role relationships;
d) To direct their work by clarifying their assignments, guiding them towards improved
performance and motivating them to work with zeal and confidence;
e) To control them by measuring and correcting their activities to assure that events conform to
plans and to co-ordinate their work.

The major responsibilities of Assistant Managers are as follows:-

 To be responsible for supervising and checking of all collection activities of the Branch.
 To ensure by test check or complete check as may be appropriate that all the financial
transactions under his section are in order.
 To verify the correctness of the entries in the Money Order Register with reference to the
Money Order Forms to initial every entry in the Money Order Register authenticating
its correctness
 To be responsible for the correctness of the entries made in the Money Order Register and of
the amounts received and recorded in the Money Order Register.
 To correspond with persons from whom the Money Order has been received incases where
proper details regarding such remittances are not available.
 To receive and enter all the cheques/demand drafts received in the ―Cheques/Bank Drafts
Sent for Collection Register‖ and to get defects, if any, rectified or to return the cheques to the
parties on the same day if the defects noticed could not be got rectified, close the register
every day.

25
 To ensure that the cheques / bank drafts are duly crossed and if not, to cross them ―Account
Payee‖;
 To supervise the postings in the Chitty Collection Registers/ Chitty Day Book, Personal
Ledgers/ Loan Registers/ Sugama Account Ledger and Collection Registers, and all the other
relevant registers.
 To supervise and check the postings in the Personal Ledger
 To ensure timely preparation and tallying of quarterly collection summary.
 To ensure that the amount kept under suspense are cleared in time..
 To regulate and conduct the draw/auction to act as proxy on behalf of the subscribers who
have authorized the Branch Manager for such participation.
 To get the auction proceedings voucher prepared.
 To get the default statements (prized, non-prized and loan schemes) prepared in time.
 To operate the Bank account of the Branch jointly with the Branch Manager.
 To make physical verification of cash with the Cashier at the close of business every day, to
certify the fact of having made such verification in the cash scroll and to bring to the notice of
the Branch Manager difference between the actual physical cash and book balance;
 To arrange for the preparation of chitty balance sheets and its filing.
 To scrutinize the cheques/ demand drafts and ensure they are in order;
 To be responsible for the remittance of daily cash collection (including the Money Order
collection) in to the bank on the date of collection itself or latest by the next working day, for
the maintenance of the Cash in Transit Register.
 To be responsible for the safe keeping of the cheques received until they are deposited in to
the Bank.
 To verify and initial transfer chalans and to be responsible for any erroneous or fraudulent
entry in respect of such chalans.
 To ensure the writing up of the Chitty Ledger.

 To verify the scrutiny report, ensure that the prize amount payable agrees with the figures
shown in the original auction minutes, ensure with reference to books of accounts that the
deductions to be made as shown in the report are accurate and initial the scrutiny report..

26
 To get all payment vouchers prepared, to check and initial it, and to be responsible for its
accuracy.
 To be responsible for the accuracy of the prize amounts and other payments made.
 To review and submit monthly work position reports to the Branch Manager.
 To ensure timely completion of annual accounts and related statements.
 To transfer funds to Regional Office to wards:
 Salary deduction
 Share of tax and Head Office administration overheads along with the other Branch
collection.
 To get the Bank account and Head Office Current Account/ Regional Office Current Account
reconciled monthly and to give the reconciliation statement, by 15th of every succeeding
month
 To be responsible for the safe custody of all the relevant records, registers, vouchers etc.,
handled by him and seats under his control.
 To initiate action for the starting of chitties in the Branch and to arrange the release of
advertisements with the approval of the Branch Manager.
 To assist the Manager in canvassing subscribers as and when necessary
 To obtain sufficient security for the payment of future subscription.
 To take steps for the payment of prize money to the prized subscriber on the due date, if the
subscriber has furnished adequate security for the payment of future subscriptions, and to
intimate the fact to the prized subscribers;
 To verify the genuineness/ liability of the subscribers/ sureties;
 To examine all the documents concerned with the payment of prize amount and ensure that
they are in order and correct and complete in all respects.

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3.10 WORKING OF THE BRANCH

1. OFFICE HOURS
The Office hours for regular employees are from 10 am to 5 pm on all working days except in the
case of Evening Branches. The office hours prescribed for Evening Branches are from1p.m to7 p.m.
In the case of part time employees; it is fixed from 8 a.m. to 1 p.m. in regular Branches and from 11
am to 4 p.m. in Evening Branches.

2. PUNCTUALITY IN ATTENDANCE
All members of the staff are expected to observe punctuality in attendance. Habitual late attendance
and other irregularities connected with attendance are punishable under the provisions of the
Standing Orders of the Company. Any employee found absent from his seat during office hours for a
duration exceeding five minutes except with the permission of the authorized officer will be called
upon to explain his absence and if this habit persists, disciplinary action will be taken against such
employee who is found guilty.

3. HOLIDAYS
All holidays declared by the Government of Kerala as holidays for its employees will be holidays for
the company also, unless declared to be restricted to specific department in which the Company is not
included. In addition to the above, the local holidays either whole or part declared by Government are
also available to Company employees of the respective locality. At the beginning of every year, a list
will be drawn up and released showing the public holidays on the basis of the public holidays
declared by the Government. In addition to the holidays fixed for each year all Sundays and Second
Saturdays will be holidays for the Company.

4. MAINTENANCE OF OFFICE PREMISES

The Unit Heads in the Units, Regional Managers in the Regions and Administrative Officer in the
Head Office are responsible for the security, upkeep and proper maintenance of the offices

28
concerned. The office premises shall be kept clean and tidy. All employees are expected to help in
the maintenance of cleanliness of the office premises by not throwing about papers, cigarette stumps,
etc., and by not disfiguring walls, pillars etc., with writing of slogans and the like and pasting and
displaying posters on them. Recognized unions may, however, put up notices about legitimate union
activities in the space provided for them. The offices shall be arranged to be opened at 8 am morning,
earlier to enable the sweepers to sweep the rooms and premises, cleanup the furniture, fittings,
bathrooms and the lavatories. The Administrative Officer in the Head Office, the Regional Managers
in the Regions and the Unit Heads in the units shall occasionally inspect the above work and ensure
cleanliness and tidiness of the premises. Files, registers and papers shall be methodically arranged
and when not in use, should be kept neatly stacked in the space provided. No files, registers or papers
shall be kept on the floor. Waste paper should be kept in the waste paper baskets provided and not
strewn about on the floor. Important papers, files and other records should be kept in safe custody. It
must be scrupulously ensured by all concerned that small items of stationery such as pins, gem clips,
tags, carbon papers, refill, etc., are kept in their proper places and not allowed to lie strewn about on
the floor. The offices should be closed at the end of the day and the doors and windows securely
locked. This should be ensured by the Administrative Officer in the H.O., Regional Managers in the
Regions and Unit Heads in the Units or by the persons authorized in this behalf. It is the duty
of every member of the staff to observe strict economy in the use of articles supplied and facilities
provided. All stationery items supplied should be economized to the maximum possible extent and all
kinds of waste eliminated. Lights, fans should be switched off and water taps turned off when not
required for use.

5. ACCEPTANCE OF DONATION FROM SUBSCRIBERS.

Members of staff are strictly forbidden from seeking or accepting donations from subscribers or
others either in the personal capacity or in his representative capacity as member or office bearer of
an association.

6. DISPLAY OF NATIONAL FLAG

The National Flag shall be hoisted on the office building on special occasions like Republic Day or
Independence Day

29
7. OBSERVANCE OF BUSINESS DISCIPLINE IN THE INTEREST OF GOOD
CUSTOMER RELATIONS.
In the dealings of the Company with the customers, it is not enough that the employees are just
and fair, but they should make the customers feel that they are just and fair. In order to ensure this the
members of the staff shall observe the following business discipline in addition to the directions
given elsewhere in this manual:
(i) To act honestly and faithfully at all times
(ii) To demonstrate a sense of fair play and impartiality in disposing of cases;
(iii) To show courtesy and consideration in public dealings;
(iv) To maintain strictest secrecy regarding the Company‘s affairs whatever be the
Provocation;
(v) To observe scrupulously the rules and regulations;
(vi) To avoid seeking and receiving cash, donations and advertisements from the Company‘s
clients, constituents, business associates, etc., even for a good cause;
(vii) To attend the public grievances promptly;
(viii) To dispose of cases promptly but without undue haste;
(ix) To get all oral instructions and decisions of the higher authorities down in writing and get
them confirmed;
(x) To give job rotation to those who are on sensitive positions;
(xi) Not to issue or cause to issue cheques in favor of other subscribers/sureties/ guarantors
towards payments in connection with the business of the Company;
(xii) Not to attend the auction as proxy (except the Unit Heads) on behalf of others in the Unit
where they are working;
(xiii) Not to accept payments in connection with the business of the Company on behalf of
others except with the permission of the Unit Head, who shall exercise such caution and
discretion in this regard
(xiv) Not to make payments in cash in connection with business of the Company in lieu of
cheques issued;
(xv) Not to en cash cheques issued to subscribers/ dealers or others in connection with the
business of the Company;

30
 (xvi) Only cashiers/ authorized persons shall accept cash from the transacting public who
should issue proper receipt and keep proper accounts.
(xvii) Not to accept blank cheques /cheques un-accompanied by pay-in-slips/ cheques not duly
signed and without details of remittance.
(xviii) To be impartial in all their dealings with the transacting public;
(xix) To supply the intending loanees with a list of approved dealers and the choice of dealers
left to them.

3.11 DEPARTMENT PROFILE

A) The different departments of the Head Office are the following:

i. Business Department:-
This is headed by General Manager (Business) who is responsible for all business activities of
the Company.

ii. Finance Department:-

This department is headed by the General Manager (Finance). The main functions
of this department are planning, budgeting and control, compilation of accounts, reconciliation and
preparation of annual accounts, and controlling Deposit Schemes of the Company etc.

iii. Administration Department:-

This is headed by the DGM P& HR to be in charge of personnel administration , salary,
industrial relations, man power planning etc.

iv. Secretarial Department:-

This department is headed by the Company Secretary who is responsible for the functions
conferred on him by the Company‘s Act, 1956.

v. General Administration Department:-

This department is headed by one of the senior officers of the Company who will be
responsible for the General Administration including purchase, printing etc.

31
 vi. Legal Department :-
This department is headed by AGM (Legal) who is responsible for all day to day legal
matters.

vii. Internal Audit Department :-

This department is headed by the DGM (IA&V) assisted by seventeen audit teams to exercise
internal check and control.

All the above Department Heads report directly to the Managing Director.

(B) The different departments of the Regional Office

The activities of the Regional Managers are grouped functionally as well as scheme wise.
They are mainly responsible for the proper and also healthy functioning of the Branches and to be in
charge of the overall growth and development of the Branches under their jurisdiction. The Regional
Managers report directly to the General Manager Business and the General Manager Finance for the
respective functions and to the Managing Director relating to the other functions. The functional
departments of the Regional Office are Business, Accounts, and default; which corresponds to
respective departments with focus on operational aspects

C) The different departments at Units level

At the base level the Units are graded into three categories viz.

(i) Major Branches having a chitty of Rs.70 lakhs and above.

(ii) Medium Branches having a chitty of Rs.40 lakhs and above and
(iii) Small Branches having a chitty of below Rs.40 lakhs.
A Unit Head, the Manager; heads each Unit and its activities are grouped
under Assistant Manager(s)/ Deputy Manager(s). The Unit Heads report directly to the Regional
Manager and to the Departmental Heads in the Head Office on matters pertaining to the departments
concerned. In exceptional circumstances the Unit Heads can report directly to the General Manager
(Business)/ General Manager (Finance) and Managing Director.

The different departments in the unit are as follows:

32
 1) Collection Department

Assistant
manager
(collection)

Assistant Assistant Assistant

Assistant (cash)
(Auction) (Sugama) (FD/STD)

Figure 9.Collection Department

Important functions of collection department are

● Receive money from customers

● Give receipt to customers
● Ensuring proper document for every receipt
● Entry of transactions in the books.
● Internal checking
● Maintain effective coordination with accounting department
● Preparing periodic collection report
● Sending collection agents to collect money.
● To arrange for the preparation of chitty balance sheets and its filing.

An assistant manager will be the head of this department. She/he monitors all activities relating to
receipt of cash and has the responsibility of ensuring that there are no mistakes or frauds committed
during transactions. Major decisions relating to the receipts of funds are taken by the AM Collection.
All staff in the collection department should report to him/her. She/he delegates responsibility to the
staff under him/her.

33
 2) Accounts Department

Assistant manager
(Accounts)

Assistant (Loans / chitty

price money payments) Assistant (book keeping)

Figure 10.Accounts Department

Important functions of accounts department are

● To be responsible for the remittance of daily cash collection (including the Money Order
collection) and cheques in to the bank on the date of collection itself or latest by the next
working day.
● To ensure once in every fifteen days that the cheques sent for collection are either realized or
dishonored and the entries in the Cheque Sent for Collection Register are complete in every
respect.

● To ensure the writing up of the Main Cash Book, to sign it and to check the postings of
General Ledger and to be responsible for the accuracy of the postings.
● To examine all the documents concerned with the payment of prize amount and other

34
 3) General Administration Department

Figure 11.General Administration Department

Important functions of general administration department are

● To initiate action for the starting of chitties in the Branch and to arrange the release of
Advertisements.
● To assist the Manager in canvassing subscribers as and when necessary
● To issue variolas (application form for joining chitty) to the canvassing agents of the Branch,
maintain the Agents Register and verify the claims for commission received from agents.
● To take steps for the payment of prize money to the prized subscriber on the due date, if the
subscriber has furnished adequate security for the payment of future subscriptions, and to
intimate the fact to the prized subscribers.
● To verify the genuineness/ liability of the subscribers/ sureties.
● To be responsible for the entire personnel administration of the Branch for the proper
maintenance of Attendance Register, Casual Leave Register and other leave accounts,
personal files, service records/ books , provident fund records, loans, advances and
its repayment etc

35
 4) Default follow up Department

Figure 12.Default Follow-up Department

Important functions of default follow up department are

● Monitoring of default on a current basis in all schemes of the company.

● Initiating necessary follow up action including RR, in cases of chronic default
● Timely preparations of default statements

Special Gold Loan Department

Figure 13.Special Gold loan Department

Important functions of special gold loan department are

36
 ● Speedy and efficient disbursal of Gold Loan
● Safe custody of ornaments pledged.
● Default monitoring of the Gold Loan scheme
● Initiating auction steps in cases of chronic default.
● Preparation of periodic schedules.

6) Systems Department

Figure 13.Systems Department

KSFE is passing through the infancy stages of its computerization process. The unit level systems
department is now formed on an ad-hoc basis. There is no exclusive
assistant manager providedfor this function. Generally any one of the assistant
managers who is in charge of Collection/ Accounts/ Default is given additional responsibility to
supervise this function. Generally, he is required to look after issues related to software / hardware /
data entry errors etc and at the same time extent a helping hand to other general activities of the
branch.Important functions of systems department are

● Ensure smooth functioning of all the computer systems.

● Reporting software errors/bugs to Head Office.
● Timely reporting of hardware failures to the Vendor/AMC Company.
● Taking data back ups at the prescribed intervals.
● Providing information and assistance to other employees in matters related to system.

37
3.12 SWOT ANALYSIS

Strength

1. Support, Trust and Security

2. Product Variety
3. Pre-eminent Role in Chitty Business
4. Extending Resources to the Govt. of Kerala
5. Quality Services and Products
6. Strong Customer Base
7. Adopting Technology and Benchmark Standards

Core Values of the Firm ,which includes: Integrity – work ethics Teamwork- One Team - One
Dream Operational & Execution Excellence Passionate Ownership & Taking accountability
Customer Centricity .Trust is the differentiator!

The organisation is mainly indulged in chit business. Being a public sector enterprise, unlike other
private players in the chit business, KSFE is transparent and trustworthyEstablishment of KSFE in
1969 was to save common people from the clutches of unscrupulous fly-by-night chit fund operators
with all these years KSFE has grown in to a financial super market openening doors to all classes of
people of society. KSFE is also working on products to attract youth and all segments of society
including NRKs(Non Residential Keralites) with in Chitty Fund Act (CFA) 1982 and Foreign
Exchange Management Act (FEMA). As per KSFE MD,Joshy paul "We are also on this path of
growth and all of our branches will be connected by Core Banking solution—Centralized
Accounting Software for Business Application (CASBA) within six months (181 branches are
already connected). E-Collection, Net-through payment are already established in top locations. We
are also on the way of providing the facility of on-line auction in chits so that a customer can
participate in chit auction from anywhere in the world. The concept of virtual branch is also under
consideration." KSFE has many products designed to meet the financial needs of all sort of society.
38
KSFE achieved and exceeded its business budget through branded Chits. For the current financial
year also, KSFE launched branded Chit named ―PONNONA CHITTIKAL 2016‖ for ONAM
festival season.Sugama Deposit scheme Doesn not have disturbing amount of Non Performing Asset
since its dues enjoy the status of a revenue recovery, being an arm of the State Government. Tie up
with insurance and western union money helps to attract more customers.

Weakness

 Lack of marketing activities.

 Lack of computer knowledge of workers.
 Scarcity of rural branches
 Lack of public awareness
 Absence of technology

The business performance of the Company highlights the need for achieving still higher growth rate
in future. Although the Company has been making profits throughout the period, the profitability
ratio shows fluctuations and the expense ratio shows that only a small margin is left after meeting the
expenses. The default record is high and revenue recovery performance is not satisfactory. The
outreach of the Company's services to the rural masses seems not satisfactory as shown by the lesser
proportion of rural branches. The analysis of the performance of KSFE on the basis of various
parameters reveals its viability and areas of its success and failures. Some of the objectives of the
Company at the time of its incorporation are yet to be achieved. The continued presence of the
informal and unregistered Chit Fund sector pinpoints the need for more dynamic growth for KSFE
and wider market outreach.

The scarcity of rural branches, the dearth of innovative schemes, diversification of existing schemes,
lack of public awareness on the special privileges enjoyed by KSFE, insufficient customer care and
comparatively poor quality in the delivery of services pose threats to the reputation of the Company.

Hierarchical structure of administration causes delay in decision-making and affects the speedy
operation. Insufficient customer service and delay in the payment of prize money tarnishes the image

39
and reputation of the Company, despite its safety aspect. Absence of computerization creates
operational difficulties.

Opportunities

1. RBI Rule allowing NBFIs to Roll out white-label ATMs. If established in all major urban and
semi-urban branches would definitely increase its reach in the state.

2. Service offerings by NBFCs are almost the same. KSFE has the Trust factor as differentiator. As
the company is doing more CSR Activities and follows a sound CSR Policy. It can be used as a
differentiating factor.

3. Growing consumer credit market

4. Rural wage growth is increasing. This in turn may lead to growth in vehicle and gold loans from
NBFCs

5. Product innovation and Product customization. The more research is done in making innovative
products the more will be the success of the firm.

6. Advanced Credit Scoring models that incorporate nontraditional data have the potential to extend
lending to Indias creditworthy yet financially excluded population.

7. Investing in technology and analytics to achieve the full goal of financial inclusion.

8. Ground-level understanding of their customers‘ profit le and their credit needs gives them an edge,
as does their ability to innovate and customize products as per their clients‘ needs.

9. Ongoing stress in the public sector banks due to mounting bad debt. Unavailability of lending for
rural areas.

10. Digital disruption, especially for micro, small and medium enterprises (MSMEs) and small and
medium enterprises (SMEs)

11. Increased consumption, rise in income, rise in middle class.

40
Threats

1. The continued presence of the informal and unregistered Chit Fund sector.
2. Low Barriers to Entry in to the Industry.
3. Bargaining Power of consumers is high.
4. Introduction of new schemes has been delayed due to the interference of strong labor unions
5. Threats of Substitutes, Unorganized Money lenders and other private finance firms going
digital providing better service.
6. Aggressive selling & intensive marketing strategies by other companies to gain the market
share.
7. Product innovation by other companies.eg Islamic banking NBFC firm.

41
 PART III

PROBLEM ANALYSIS

42
4.1 PROBLEM DEFINITION & ANALYSIS

The major strength of a government non-banking organization like KSFE is the trust factor that
differentiates it from other competitors. How can we add more value and credibility to the company?
What can be done to increase public awareness and increase the market share? Corporate Social
Responsibility activities can be a solution for this if adopted and implemented in a proper way. CSR
Engagement of the company is an emerging competitive advantage in non-banking sector. This
Chapter explores about the CSR policies and activities done by KSFE .Exploring the current situation
will help us to take better advantage of situation.

4.2 INTRODUCTION TO CSR

According to EU commission (2002)CSR is a concept where by companies integrate social and

environmental concerns in their business operations and in their interaction with the stakeholders on
a voluntary basis. CSR is a concept with different views all around the world. Many definitions
prevail and it has unqualified boundaries. Even though there are people who believe that business
organizations have nothing to do with social responsibility, leading trend is the other way.64% of
CEOs worldwide say that ―corporate social responsibility (CSR) is core to their business rather than
being a stand-alone program‖. They care about building trust with consumers, partners, governments,
and their employees ( (19th Annual Global CEO Survey, 2016)). India stands out from the rest of the
world being the only country with legislated CSR. The new companies Act 2013 that came into effect
from April 1, 2014, mandates that all companies, including foreign firms, with a minimum net worth
of Rs 500 cr, turnover of Rs 1,000 crore and net profit of at least Rs 5 crore, spend at least 2% of
their profit on CSR.Thus has been made mandatory under the new regulation and there are provisions
of penalties, in case of failure. Also, CSR disclosures is a major component analyzed in the
IRBI(India Responsible Business Index) and in 2012 SEBI made the submission of these disclosures
mandatory for the top 100 companies listed in BSE. Indian reports shows an increase of 11% on the
amount of money spent on CSR activities during current year when compared to the previous. The
average spending per company has also increased by 15%. (KPMG, 2016)This points to 2 facts, one:
Indian companies are getting more familiar to the act. Two: the concept of CSR and its impacts are
gaining more importance.
43
This study concentrates on the CSR Policy of KSFE and the various CSR Activities initiated by them
are analysed.CSR Reports of the company published in the annual report is studied for the year 2014-
15 and 2015-16.The Kerala State Financial Enterprises Limited, popularly known as KSFE, Is a
Miscellaneous Non-Banking Finance Company, fully owned by the Government of Kerala. It is one
of the most profit-making public sector undertaking of the State.Formed with the objective of
providing an alternative to the public from the private chit promoters in order to bring in social
control over the chit fund business, so as to save the public from the clutches of unscrupulous fly-by-
night chit fund operators. KSFE been registering impressive profits every year, without fail since its
inception.

4.3 LEGAL MANDATE FOR CSR IN INDIA

Corporate Social Responsibility (CSR) assumes significance as it permits companies to engage in

projects or programs related to activities related to social welfare and improvement enlisted under the
terms of Companies Act, 2013. There is an element of flexibility in company activities by allowing
them to select their preferred CSR engagements that are in agreement with the overall CSR policy of
the company.

As per section 135. Corporate Social Responsibility

(1) Every company having net worth of rupees five hundred crore or more, or

turnover of rupees one thousand crore or more or a net profit of rupees five crore or more

during any financial year shall constitute a Corporate Social Responsibility Committee of the

Board consisting of three or more directors, out of which at least one director shall be an

independent director.

(2) The Board's report under sub-section (3) of section 134 shall disclose the

composition of the Corporate Social Responsibility Committee.

44
(3) The Corporate Social Responsibility Committee shall,—

(a) formulate and recommend to the Board, a Corporate Social Responsibility

Policy which shall indicate the activities to be undertaken by the company as

specified in Schedule VII;

(b) recommend the amount of expenditure to be incurred on the activities referred

to in clause (a); and

(c) monitor the Corporate Social Responsibility Policy of the company from time

to time.

(4) The Board of every company referred to in sub-section (1) shall,—

(a) after taking into account the recommendations made by the Corporate Social

Responsibility Committee, approve the Corporate Social Responsibility Policy for the

company and disclose contents of such Policy in its report and also place it on the

company's website, if any, in such manner as may be prescribed; and

(b) ensure that the activities as are included in Corporate Social Responsibility

Policy of the company are undertaken by the company.

(5) The Board of every company referred to in sub-section (1), shall ensure that the

company spends, in every financial year, at least two per cent. of the average net profits of the
company made during the three immediately preceding financial years, in pursuance of its
Corporate Social Responsibility Policy:Provided that the company shall give preference to the
local area and areas around itwhere it operates, for spending the amount earmarked for
Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its

45
 report made under clause (o) of sub-section (3) of section 134, specify the reasons for not

spending the amount.

Explanation.—For the purposes of this section ―average net profit‖ shall be calculated

in accordance with the provisions of section 198.

The following activities can be performed by a company to accomplish its CSR obligations:

● Eradicating extreme hunger and poverty

● Promotion of education
● Promoting gender equality and empowering women
● Reducing child mortality
● Improving maternal health
● Combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria
and other diseases
● Ensuring environmental sustainability,
● Employment enhancing vocational skills, social business projects
● Contribution to the Prime Minister‘s National Relief Fund or any other fund set up by the
Central Government or the State Governments for socio-economic development, and
● Relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other
backward classes, minorities and women and such other matters as may be prescribed.

Under the terms of Companies Act, preference must be given by companies in its CSR activities to
local areas and the areas where the company operates. Company may possibly also choose to link
with 2 or more companies for fulfilling the CSR activities provided that they are competent to report
individually. The CSR Committee will also prepare the CSR Policy in which it includes the projects
and programmes which is to be undertaken, organize a list of projects and programmes which a
company plans to embark on during the execution year and also focus on integrating business models
with social and environmental priorities and process for the reason of creating share value. The
company can in addition make the annual report of CSR activities in which they declare the average

46
net profit for the 3 financial years and also approved CSR expenditure but if the company is not
capable to spend the minimum required expenditure the company has to provide the reasons in the
Board Report for non-compliance so that there are no related penal provisions.

4.4 CSR POLICY OF KSFE

A) AIMS & OBJECTIVES OF CSR COMMITTEE

(i) To develop a long-term vision and strategy for KSFE‘s CSR objectives.

(ii) Establish relevance of potential CSR activities to KSFE‘s core business and create an overview
of activities to be undertaken, in line with Schedule VII of the Companies Act, 2013.

(iii)KSFE shall promote projects that are : (a) Sustainable and create a long term change; (b) Have
specific and measurable goals in alignment with KSFE philosophy; (c) Address the most deserving
cause or beneficiaries.

(iv) To establish process and mechanism for the implementation and monitoring of the CSR
activities for KSFE.

B) The CSR Team have the following responsibilities:

(i) Formulate and recommend to the Board the CSR activities/programs to be undertaken by KSFE.

(ii) Recommend the CSR Expenditure to be incurred on the CSR activities/programs.

(iii) Institute a transparent mechanism for implementation of the CSR projects and activities.
Effectively monitor the execution of the CSR activities.

(iv) Prepare an annual report of the CSR activities undertaken for KSFE and submit such report to
the Board

C) Responsibility of Board.

(i) Approve the CSR Policy and the CSR Expenditure after taking into consideration the
recommendations made by the CSR committee.

47
(ii) Ensure the CSR spending every financial year of at least 2% of average net profits made during
immediately preceding 3 financial years, in pursuance with the Policy.

(iii) Ensure that CSR activities included in the CSR Policy are undertaken by KSFE and that such
activities are related to the activities specified in Schedule VII of the Companies Act.

(iv) Ensure disclosure of the contents of the CSR Policy on the KSFE website.

(v) Directors‘ Report for FY 2014-15 onwards to include: (a) Contents of the CSR Policy and
Composition of the CSR committee; (b) An annual report on the CSR in the prescribed format as per
Appendix- 3; (c) Reasons for failure (if any) to spend required amount on CSR activities.

(vi) KSFE shall undertake the CSR activities directly. The Board may, in the future, decide to
undertake and implement its CSR activities through a registered trust or registered society or a
Section 8 company (Non-profit entity) established by the KSFE Group. In case the trust, society or a
Section 8 company is not established by the company or its holding or subsidiary or associate
company, then such an entity will need to have a 3 years track record of undertaking similar projects
or programs.

D) CSR Expenditure

(i) In every financial year, KSFE shall spend a minimum of 2% of its average Net Profits in the
immediately preceding three (3) financial years. Average Net profits shall mean the net profits of the
Company as per the Profit & Loss Statement prepared in accordance with the Companies Act, 2013;
Net Profits shall exclude dividend received from other companies in India.

(ii) CSR Expenditure shall mean all expenditure incurred in respect of specific projects/programs relating to
the approved CSR activities.

(iii) CSR Expenditure shall not include expenditure on an item not in conformity or not in line with activities
which fall within the purview of the CSR activities listed in Schedule VII.

(iv) CSR Expenditure shall not include Projects or programs or activities undertaken outside India.

(v) The surplus arising out of the CSR activities or projects shall not form part of the business profit of KSFE.

48
(vi) Contributions by other KSFE affiliates or employees may also be received and utilized in respect of the
CSR activities undertaken.

E) CSR Projects undertaken

(1) KSFE shall promote CSR activities/Projects in the field of :

(i) Making available safe drinking water in schools, colleges, hospitals, selected villages etc. by
installing tanks and pipelines, digging bore wells etc.

(ii) Ambulances to hospitals, providing modern medical equipments and Gensets to hospitals and
palliative care centres.

(iii) Providing wheel chairs, tricycle, scooters and supporting equipments to differently abled people.

(iv) Setting up old age homes and support to orphaned / blind students requirements. (v) Promoting
gender equality empowering women etc. setting up e-library for the benefit of students and others.

(vi) Taking measures for ensuring environment sustainability and conservation of natural resources.

(vii) Promotion of sports and support to national/international level players to participate in such
events.

(viii) Contribute to the Prime Minister‘s National Relief Fund or any other fund set up by the Central
Government for socio-economic development and relief. (2) KSFE may also undertake other CSR
activities in line with Schedule VII. (3) The CSR activities shall be undertaken in locations within
India. KSFE shall give preference to the local areas and the areas around which KSFE operates while
considering the activities to be undertaken and spending the amount earmarked for CSR activities

F)Implementing CSR Activities

(i) The day to day implementation and execution of the CSR activities/projects shall be carried out
through a team constituted for the purpose and headed by the designated Officer.

49
(ii) KSFE shall undertake the CSR activities directly and also through various implementing
agencies such as, NGO‘s, non-profit organizations, etc. Such implementing agencies shall have an
established track record as prescribed under the law.

(iii) Some of the initiatives taken up by KSFE will facilitate the involvement of KSFE employees as
volunteers in ongoing projects and events, giving them an opportunity to engage in socially
meaningful activities, thus, enabling them to realize their full potential and role as socially
responsible citizens (Employee Volunteer Programs).

(iv) The initiatives undertaken may be communicated to the employees through specific awareness
campaigns, so as to enable maximum participation.

(v)KSFE may also collaborate or pool resources with other companies to undertake CSR activities in
such a manner that each companies are in a position to report separately on such CSR projects

(vi) The following activities do not qualify as CSR Activities under the Companies Act, 2013: (a)
Projects or activities not falling within Schedule VII (Appendix 1); (b) Activities undertaken in
pursuance of normal course of business; (c) Projects or programs or activities that benefit only the
employees of KSFE and their families (d) Direct or indirect contribution to any political party.

G) KSFE-CSR Team Capabilities

KSFE may build and enhance the CSR capabilities and skills of its own personnel through
institutions with established track record of minimum three financial years. The expenditure shall not
exceed 5% of the total CSR expenditure of KSFE in one financial year

H) CSR Reporting

The Board in its Annual Report shall include the details of the CSR activities undertaken in the
Financial Year. The CSR Committee shall provide a responsibility statement on the implementation
and monitoring of the CSR Policy and that it is in compliance with CSR objectives of KSFE, which
statement shall form part of the Boards‘ Report.

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I) Review and Audit

The CSR committee shall be apprised on the implementation of the CSR activities and the progress
shall be monitored on a quarterly basis. KSFE shall through its internal controls, monitoring and
evaluation systems implement, assess, document and report the impact of its CSR activities/projects.
Records relating to the CSR activities and the CSR Expenditure shall be meticulously maintained.
The Records shall be submitted for reporting and audit. The financial audits of the implementing
agencies (wherever applicable) shall also be done through periodic audits. In this regard, KSFE may
appoint independent external consultants for carrying out such audits. 14. AMENDMENTS The
Policy may be reviewed and amended from time to time by the Board subject to the provisions of
Companies Act 2013.

4.5 CSR ANALYSIS FOR PAST 2 YEARS

Particular 2014-15 2015-16

Average Net Profit of the company for the last three financial years 73.67 crores 168 crores

Prescribed CSR Expenditure(2% of above amount) 1.47 crores 3.34

Amount outlay for CSR Activities 12429944 37746256

Amount spent in financial year 99840 42355505

Table no.2 Statistics

2014-15

For the year 2014-15 more than 50 % of the fund was allocated to the upliftment and betterment of
health facilities of the state. The least amount o f fund is allocated to the environment related
activities in the firm. Although the number of projects included in the education sector is high
compared to the others, the amount allocated is 20.56% of the total fund.

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Figure 14.2014-2015

2015-2016 Fund allocation for various sector in the 2015-16 budget of CSR Activities.

Figure 15.2015-2016

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2014-15 The number of projects taken to promte different sectors through CSR Activiites.

Figure15.2014-2015 Number of Projects

Projects under Health includes:

 Rural development and health care.

 Ambulances to hospitals, providing modern medical equipments and Gensets to hospitals and
palliative care centres.

 Promoting preventive health care and sanitation

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2015-16 The number of projects taken to promote different sectors through CSR Activities.

Figure 16. 2015-2016 Number of Projects

Projects under Rehabilitation include:

 Setting up old age homes and support to orphaned / blind students requirements. (v) Promoting
gender equality empowering women etc. setting up e-library for the benefit of students and others

Projects under Environment include:

 Making available safe drinking water in schools, colleges, hospitals, selected villages etc. by
installing tanks and pipelines, digging bore wells etc.

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4.6 FINDINGS AND SUGGESTIONS

FINDINGS

 KSFE has well implemented the CSR policy as per the Company‘s act,2013.
 Company has formulated a CSR committee for carrying out the CSR activities of the firm.
 Company has recorded the CSR activities of the firm in the annual report in a well-defined
manner.
 Company is unable to spend the exact amount as per the budget for the financial year
although it is compensated in the consecutive year.
 Company spends the entire amount directly to the cause, without the help of any Third
parties.
 Company does not involve its employees or customers in the CSR activities.
 CSR Activities of the firm has narrowed down to providing fund alone.

SUGGESTIONS

 Clubbing with NGO‘s and other socio help groups to execute CSR activities would
increase the social impact of the projects.
 Involvement of Employees and customers of the firm in the volunteering activities will
increase the credibility of the Activities of the firm.
 Company should find and take up more regional social projects to bring social
transformation.
 Projects related to environment and pollution should be focused more as it is a burning
issue and affect the weaker part of the society the more.
 Involvement of school and college students will also increase awareness and do help for
the betterment of the society in future.

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 Firm should invest in cause marketing which will help to attract more customers
especially youngsters and NRI s.
 Adding details about the CSR activities in website and including pictures and
testimonials is an added advantage to increase credibility of the firm.

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5. CONCLUSION

NBFCs have been playing a complementary role to the other financial institutions including
banks in meeting the funding needs of the economy. The Kerala State Financial Enterprises Limited,
popularly known as KSFE, Is a miscellaneous non-banking finance company, fully owned by the
government of Kerala. It has a good profit making record with large market share in Kerala. Also the
statistics shows the increase in profit throughout the years. The organizational set up in KSFE is a
three-tier system from its very inception with the head office as the top controlling and coordinating
body, the Regions constituting the intermediary level, coordinating and controlling all the activities
of the various branches under them and the branches at the base level as profit generating centers.
The management of the Company has been vested in the Board of Directors constituted by the
Governor from time to time. There are different departments in Head office,regional office and unit
level offices of the firm. KSFE has implemented CSR policy as per the legal requirements in the
country and carries out good amount of CSR activities. This ‗organizational study‘ was an attempt to
study the organizational structure and the department functions of KSFE. The study provides
information about the products, organizational structure of the company, departmental functions and
gives a good knowledge about the financial position of the company. The co-operation and
interaction extended by the employees and management of KSFE have made it possible for the in-
depth organizational study which would be used to the research in the future.

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6. BIBLIOGRAPHY

➢ Mukheri Abhishek (2016) Analysis of mandatory CSR expenditure in India: a survey,

International journal of corporate governance 7(1):32 - 59

➢ Shyam Reena(2016) AN ANALYSIS OF CORPORATE SOCIAL RESPONSIBILITY IN

INDIA,Internation journal Of Research Granthaalayah 4(5),56-64

➢ Mukheri Abhishek (2016) Analysis of mandatory CSR expenditure in India: a survey,

International journal of corporate governance 7(1):32 - 59

➢ Moshal B.S. (2010) , Principles of Management, Anne Books Pvt. Ltd.

➢ Pandey I.M. (2001), Financial Management, Vikas Publishing House Pvt. Ltd.

WEBSITE links:

➢ https://rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=14733
➢ https://rbidocs.rbi.org.in/rdocs/notification/PDFs/41MD9A29482F99DA4EDC85228FE9DB3
57710.PDF
➢ http://pop.ksfe.com/downloads/presentation_ksfe_md.pdf
➢ http://shodhganga.inflibnet.ac.in/bitstream/10603/5968/8/08_chapter%204.pdf
➢ https://economictimes.indiatimes.com/topic/KSFE
➢ https://www.deccanchronicle.com/nation/in-other-news/190616/private-chits-tap-into-kerala-
state-financial-enterprises-share.html
➢ www.ksfe.com

➢ https://docplayer.net/46268667-Chapter-seven-findings-and-suggestions.html
➢ http://www.passlinebusinessmagazine.in/corporate/635-ksfe-deliver

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