Kerala Financial Corporation Bonds: Reliable Returns from a Government-Backed Institution

 

For investors looking to balance yield and security, the listed bonds offered by Kerala Financial Corporation (KFC) present a compelling opportunity. Backed by the Government of Kerala, and rated AA by Acuite, these bonds offer stable returns with strong structural protections — ideal for risk-conscious, long-term investors.

About KFC

Kerala Financial Corporation was set up in 1953 under the State Financial Corporations Act to support industrial development in the state. Since then, it has become a key financial institution, lending to MSMEs across Kerala through its 22 branches and zonal offices.

Its strategic role as a nodal agency for state-led financial schemes further underlines its importance. With 99.14% ownership by the Government of Kerala, and board members from SIDBI, LIC, and SBI, KFC is not just credible — it’s critical to Kerala’s economic ecosystem.

Why KFC Bonds Stand Out

• State Ownership: High government stake enhances credibility

• DSRA Protection: Debt Service Reserve Account covers 2 quarters of payments

• Cash Collateral: Fixed deposit buffer equals 20% of the bond principal

• AA Rating: Backed by consistent financial performance

• Listed & Tradable: Enhances liquidity and investor confidence

FY25 Key Financial Metrics

• AUM: ₹8,011.99 crore

• Total Assets: ₹9,509.08 crore

• Revenue: ₹901.39 crore

• Profit After Tax: ₹98.16 crore

• Capital Adequacy (CRAR): 28.65%

• NNPA: 0.61%

• Net Worth: ₹1,328.35 crore

These numbers reflect a well-capitalized institution with prudent lending practices and healthy asset quality.

Bond Offerings

Here’s a snapshot of current bond options:

• INE818F07344 – 8.23% YTM – 72 months – ₹103,291

• INE818F07302 – 8.24% YTM – 84 months – ₹103,598

• INE818F07310 – 8.25% YTM – 96 months – ₹103,869

• INE818F07336 – 8.26% YTM – 108 months – ₹104,109

• INE818F07328 – 8.27% YTM – 120 months – ₹104,318

All bonds are senior secured and listed, offering investors reliable returns with relatively low risk.

Leadership and Oversight

Led by IAS officers such as Managing Director Sriram Venkitaraman and Chairman Dr. A Jayathilak, the corporation benefits from high administrative accountability and public-sector transparency.

Investor Takeaway

KFC bonds are designed for long-term investors seeking steady income, capital safety, and exposure to a state-backed issuer. The combination of government support, structural security (DSRA + collateral), and consistent financial performance makes these bonds a credible option in today’s fixed-income space.

Whether you’re a conservative investor or building a retirement corpus, Kerala Financial Corporation bonds could offer the right mix of predictability and peace of mind.