Ifci Pref Issue Opens Tomorrow

The Industrial Finance Corporation of India (IFCI) will open a preference share issue on September 9 to mobilise Rs 200 crore. This is the second preference share issue by the FI, after its first such issue successfully raised the targetted Rs 100 crore within a record five minutes of its opening two years ago.

But IFCI plans to stay away from the private placement market for sometime in view of the rising interest rates fuelled by fierce competition for resources by the Industrial Development Bank of India and the Industrial Credit and Investment Corporation of India (ICICI), said a senior official.

"There is plenty of liquidity in the market. So this rise in interest rates due to fierce competition for resources in the market is not warranted. We do not want to borrow at such high rates. We will be staying away from the market for sometime," the official said.

He said last week the interest rates touched an alarming 14.25 per cent.

"We are not interested in borrowing at that rate. Our prime lending rate is itself 14 per cent. And the maximum we lend is say 1.5 pre cent more than that," the official said.

The rising interest rate is only part of the reason for restraining from entering the market. The other reasons include a comfortable resource position and a general lack in demand for credit, the official said.

"We are already planning to raise Rs 200 crore through the preference share route. So we need not go to the market for sometime. And since there is no real growth in credit, the demand for funds is not really there," the official pointed out.

The preference share route will help the FI augment its capital and strengthen its capital adequacy, besides it will be able to raise funds at slightly cheaper rates in the range of 13-13.5 per cent range. The official expressed confidence of mobilising the targetted Rs 200 crore.