Bhubaneswar- The Odisha State Financial Corporation (OSFC), established in 1956 to provide loans to micro, small, and medium enterprises (MSMEs), is now nearing closure. The institution, once central to the state’s industrial development efforts, is on the verge of becoming defunct due to alarming staff shortages, massive loan defaults, and administrative neglect.
Over the years, the recovery of disbursed loans has been minimal, primarily due to the unavailability of required staff. The situation has escalated to a point where the state government stands to lose nearly Rs7,000 crore. Currently, OSFC still holds around 8,200 active loan accounts through which nearly Rs250 crore was disbursed. With the addition of interest, the outstanding dues may exceed Rs2,000 crore.
However, recovering these funds remains a distant dream. The department tasked with overseeing OSFC’s operations has only 11 permanent employees statewide—just a fraction compared to its earlier strength of over 1,000. The main office at OMP Square functions with only five staff, including a driver. Branch offices in Sambalpur, Bhubaneswar, and Cuttack have just one to three staff each.
At its peak, OSFC operated 17 branches across Odisha, employing over 1,000 people. But after a 2005 government decision led to the forced retirement of 607 staff members, only around 400 remained. Gradually, this number dwindled. Today, only three branches are functional, and there has been no fresh recruitment since 1990. The existing employees are now approaching retirement, with all but one set to retire by 2027.
Adding to the concern, these employees are still drawing salaries based on the 5th Pay Commission recommendations and are not eligible for pensions. With no new staff or support, the responsibility of loan recovery now falls on retired officials from the Industries Department, who have been brought in temporarily.
Legal challenges further weaken the institution. More than 100 loan-related cases are pending in courts, but due to the absence of appointed lawyers, the chances of recovering dues through litigation are slim. Additionally, mortgaged properties against defaulted loans either no longer exist, have unclear ownership, or have been encroached upon. Shockingly, some politically influential individuals are reported to have taken massive loans without repayment.
OSFC owns valuable real estate in ten prime locations across the state, but poor recordkeeping and lack of oversight have left these assets vulnerable to encroachment and neglect. In many instances, land records have gone missing, and aging office vehicles are decaying unused.
Despite this grim reality, the remaining staff still hope the government will consider reviving the corporation. However, with no concrete steps taken toward recruitment, asset recovery, or financial restructuring, the end of this once-crucial institution seems inevitable.
What was once envisioned as a powerful tool for industrial empowerment is now reduced to a hollow shell—an unfortunate testament to decades of institutional neglect and mismanagement.
