Ifci Gets Rs 200 Crore Bailout Fund From Sbi

Nearly six months after finance minister Yashwant Sinha cleared a Rs 1,000 crore bailout package for beleaguered IFCI Ltd, State Bank of India (SBI) on Friday disbursed its share of the assistance amounting to Rs 200 crore.

IFCI executives said the SBI, which along with its subsidiaries held 2.1 per cent stake in IFCI, has sanctioned the amount but has not specified the instrument which it would use to invest the money. Also, the interest rate on the instrument has not been specified so far.

"These things are being worked out," said an executive. Sources further said that SBI has not laid down any reinvestment conditions for subscribing to the NCDs, as is the case with the Industrial Development Bank of India (IDBI), the largest shareholder with a share of 31.7 per cent.

 

IDBI is now the stakeholder which is yet to disburse its entire share of assistance despite it agreeing to infuse funds to shore up IFCI's capital adequacy ratio. The institution has sanctioned the entire share of its assistance amounting to Rs 200 crore but has only disbursed Rs 50 crore.

IFCI sources said that IDBI is insisting that the remaining amount would be sanctioned only if the Delhi-headquartered institution agrees to reinvest the amount with it. "They want a quid pro quo, which we are trying to avoid. Negotiations are underway and we expect the amount soon," said an executive.

He added that if IDBI does not agree to IFCI's request the Delhi-headquartered institution would have no option but to agree with the conditions laid down by its largest shareholder.

In August last year, finance minister, after deferring the decision for years, had impressed upon three IFCI shareholders _ IDBI, SBI and Life Insurance Corporation of India _ to infuse Rs 200 crore each into the institution. The government on its part contributed Rs 400 crore by subscribing to IFCI's 20-year NCD, which is eligible to be treated as tier-I capital. The decision was taken as IFCI was close to defaulting on its repayment obligations.