Chidambaram To Inaugurate New Irbi Avatar On Mar 28

Union finance minister P Chidambaram will formally inaugurate the Industrial Investment Bank of India (IIBI), the new corporatised form of the Industrial Reconstruction Bank of India, based in Calcutta, on March 28.

Chidambaram will unveil the new financial structure of the refurbished financial institution which is set to go a long way from a bank set up with the aim to nursing sick firms back to health.

Sources feel that there will be a sea change in the focus and activity of the newly formed FI. After the institution takes over the mantle of a corporate entity, we expect hectic activity in the form of raising of funds from the market in the form of bonds, debentures and equity, the IIBI chairman G Goswami said. He said the decision to tap the capital markets for funds will be taken only after the financial results of the IRBI are ready and scrutinised.

 

As of now, the equity of the outfit is wholly held by the government of India. The shareholding pattern is expected to remain unaltered even after the bank formally transforms into a corporate entity.

Sources also point out that everything will depend on the volume of business which had thinned down considerably in the last few years, leading to thin profit margins. However, this scenario is going to change soon as sources are optimistic about the economy after the budget was presented this year.

The authorised share capital of IRBI is Rs 200 crore and the paid up capital remained unaltered as on March 31, 1996 at Rs 199.30 crore. A loan of Rs 20 crore was received from the government during 1995-96 as against Rs 7 crore during 1994-95. Net borrowings from the government stood at Rs 141.87 crore at the end of March 1996.

During the fiscal 1995-96, IRBI has for the first time resorted to borrowing through unsecured loans on a private placement basis to augment its resources. Two tranches of of unsecured loans aggregating Rs 189.45 crore were issued during the year. The resource base of IRBI comprising share capital and loan from government, market borrowings through SLR and unsecured bonds stood at Rs 1471.37 crore (including reserves) at the end of March 1996.

With the formal inauguration on March 28, IIBI will join the club of Indian development financial institutions comprising Industrial Development Bank of India, Industrial Credit and Investment Corporation of India and the Indian Finance Corporation of India.