IFCI bailout package only after Budget

The finance ministry held a series of meetings with the heads of leading PSU banks and FIs on Tuesday to decide on the IFCI bailout package,...

The finance ministry held a series of meetings with the heads of leading PSU banks and FIs on Tuesday to decide on the IFCI bailout package, mainly restructuring of IFCI’s liabilities to these banks and FIs. The liabilities stand to the tune of Rs 8,000 crore.

Govt to repeal IDBI Act by Decemberl

NEW DELHI: Government said that IDBI would be first corporatised through repeal of IDBI Act in Winter Session itself. Joint secretary Shekhar Agarwal said that plans of merging IDBI with a PSU

bank or converting the FI into a universal bank would also be taken up only after the corporatisation. (PTI)

Though bank heads decided to keep mum on the deliberations of the meeting, sources said that the banks were told to restructure the interest rates and the maturity periods of the liabilities. The basic intention of the ministry is to ensure that the banks allow a rollover of the liabilities which would give the FI some breather on the redemptions pressures.

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Later talking to the reporters, finance ministry joint secretary Shekhar Agarwal said that a reform package would be worked out by March 2003. Agarwal said “we wanted to talk to lenders and stakeholders and get their perception. We will take everybody’s views and work for a proposal for IFCI.”

Earlier, the ministry had sought some clarifications on the bad loans which were extended by IFCI. The total NPAs of the IFCI stand at around Rs 6,000 crore. The government is expected to announce a cash neutral bailout package of around Rs 5,000 crore in the form of bonds, in accordance with the McKinsey recommendations. The ministry would also break up IFCI’s assets into bad and good assets and transfer the bad assets to the asset reconstruction company. What the banks are sceptical about is the fact that they have to take the double burden of subscribing to the bonds and also restructuring the liabilities. In the meeting, however, no officials of IFCI was present. According to sources, the ministry had held meeting with the IFCI top brass earlier and had kept the FI’s brass away from the meeting so that the banks and FI heads can speak their mind out on the package being drafted by the ministry.