Sbi Withdraws 'At Par' Facility For Ifb Fin Warrants
State Bank of India (SBI) has withdrawn the "at par" facility for interest warrants to IFB Finance Ltd.
The SBI decision is reflective of the bank's discontentment with the way the IFB group is going. Meanwhile, the Calcutta-based Allahabad Bank has been offered a similar facility.
A notice issued in the newspapers recently by IFB Finance to all its fixed depositors said that interest warrants issued by the company payable "at par" at all branches of SBI were cancelled with immediate effect.
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The notice also asked the deposit holders to return the unencashed interest warrants and collect interest warrants of Allahabad Bank payable at select branches in lieu of those held by them.
Confirming reports of cancellation of the facility, top sources in the company said that the group was making major attempts to set the finances in order.
A consultant has already been appointed to work out a debt restructuring package for the flagship group IFB Industries, which ran up loss of Rs 61.5 crore loss during 1997-98.
Justifying the cancellation of the facility a senior State Bank of India official said, "the group is in the midst of a severe financial crunch.
They need to get their house in order fast and beef up their financial management, also the group's financial position was a cause for concern for the bank."
IFB Industries has Rs 85.3 crore cash credit, Rs 147.18 crore as term loans and Rs 36.4 crore as unsecured loans.
IFB officials, while admitting to the problems said that the consultant's report would be submitted within two months following which attempts to boost the bottomline would commence.
SBI officials say that failure to pre-fund the amounts to be withdrawn could be the reason for withdrawing the facility.