In another ‘cash-neutral’ bailout package for IFCI, the government is likely to split IFCI’s assets and liabilities into two. The part of the assets which consist of non-performing assets (NPA) would be moved to the Asset Reconstruction Company (ARC). According to sources, IFCI’s total assets and liabilities is to the tune of Rs 20,000 crore out of which Rs 6,000 crore (which are the NPAs) would be transferred to the ARC. The rest of Rs 14,000 crore would be kept as the healthy part which like UTI would be told to run on pure market terms and conditions. The financial institution faces a redemption pressure of around Rs 5,000 crore in a time frame of two to three years. Out of this, the institution has to meet the obligations of a floating rate note (FRN) loan to the tune of $100 million which works outs to be around Rs 500 crore. The rest of the redemption shortfall mostly consists of borrowings from commercial banks and other financial institutions. IFCI overdues hit Rs 901cr MUMBAI: IFCI, which is struggling to stay afloat, has reported an overdue amount of Rs 901.85 crore as on March 31, 2002. ‘Certain bond liabilities which fell due during the year could not be paid on time due to liquidity constraints,’ IFCI said in its Annual Report for 2001-02. Its total unsecured loans amount to Rs 17,489 crore. It has foreign currency loan of Rs 2,299 crore. Some of these loans are maturing this year. IFCI’s net NPAs work out to Rs 3,897 crore. This is 22.21 per cent of the advances. (ENS) According to finance ministry sources, the government plans to meet this shortfall mainly through bonds. Fresh bonds, with government guarantee would be issued and the other FIs and commercial banks would subscribe to these bonds and thus the entire shortfall would be rolled over for at least a period of six to seven years. In the meantime, the ARC would make efforts to dispose of the NPAs and bring back funds in the FI. IFCI chairman and managing director V. P. Singh has already had a couple of meetings with the top brass of the finance ministry. The McKinsey proposal for restructuring of the FI would be the broad guidelines of the restructuring programme. At present, the government is in negotiation with FIs, banks and multilateral agencies like International Finance Corporation (IFC) and Asian Development Bank (ADB) to persuade them to pick up stake in the ARC. Both the FI and the finance ministry are working out the equity which would be shared between the ARC and the healthy asset basket. This in turn would depend upon the capital adequacy ratio which needs to match the assets which would be transferred to the two parts. The FI needs to maintain a capital adequacy ratio of around 12 per cent which at present is around 6 per cent for IFCI. At present, IDBI holds around 32 per cent stake in IFCI while the rest is divided between LIC, GIC, commercial banks, co-operative banks and public holding. According to FI sources, it seems unlikely that the holding pattern in the health part of IFCI would change at present unless the multilateral agencies show interest to pick up some part of the holding of the Indian FIs. This seems a remote possibility since a premium on the IFCI’s share at present can be totally ruled out. IFCI has not yet received any intimation from the finance ministry on the finalisation of the bailout package. In fact, according to sources, the package may take some more time though the finance ministry had earlier planned to finalise the bailout this week.
