India considers capital infusion, merger of loss-making lender IFCI

India is considering pumping about 20 billion rupees ($242 million) into state-run IFCI Ltd. and merge it after with its unit, Stock Holding Corp. of India in an attempt to rescue the beleaguered lender, according to people familiar with the matter.
 

Prime Minister Narendra Modi’s administration is seeking to make the capital infusion into loss-making IFCI to bolster its balance sheet and reduce its debt burden before considering a merger, the people said, asking not to be named as the information is not public.

IFCI has reported annual losses for at least four straight years to March 31, 2022 and has lost more than 17% of market capitalization in the past year. 

In July, Care Ratings Ltd. flagged rising bad-debt ratio and persistent losses as concerns for IFCI Ltd. The government on the other hand has been looking at cutting down its exposure in loss-making units through sale or closures, though it has spent billions of dollars to bail out state-run banks weighed down with soured loans.

No final decision has been taken on IFCI, and the government can still drop the merger and cash infusion plan, they said.

Emails sent to IFCI and Stock Holding Corporation went unanswered, and the finance ministry spokesperson declined to comment.

Stock Holding Corporation offers share depository services in India and was set up as a subsidiary of IFCI Ltd. The 32-year- old company, counts Life Insurance Corp. of India, the nation’s largest insurer, among its backers, according to information available on its website.