Finance Ministry Nixes Plan To Provide Rs 3,200 Crore To Sick Sfcs

The finance ministry has turned down a proposal to provide Rs 3,200 crore recapitalisation to 18 ailing state finance corporations (SFCs).

An expert committee on restructuring of state financial corporations (SFC) headed by former Industrial Development Bank of India (IDBI) chairman and managing director GP Gupta had recommended a Rs 3,600 crore package for 18 SFCs.

Sources said that the demand for financial assistance was turned down by finance secretary Ajit Kumar who was against the idea of bailing out the SFCs.

Of the Rs 3,600 crore package, the panel had recommended that about Rs 3,200 crore should be infused into the SFCs to improve their capital adequacy ratios while Rs 230 crore would be required for funding the voluntary retirement scheme, which had been recommended for the SFCs.

Even among the 18 SFCs, SFCs in Bihar, Orissa, Assam and Jammu and Kashmir would require a capital infusion of about Rs 1,065 crore.

The Bihar SFC alone was expected to need a capital infusion of about Rs 600 crore in order to check the erosion of capital adequacy ratio which was projected to be