Ifci Bad Loans Trebble To Rs 55 Cr

Bad debts written off by the Industrial Finance Corp-oration of India (IFCI) have nearly trebled in 1997-98 to about Rs 55 crore. The financial institution was unable to rein in on the growing non-performing assets (NPA) which touched a new high of 8.83% of the net credit for the year.

The FI has prepared a "watch list" on defaulting companies in a bid to cut back on the increased NPAs, said a senior IFCI official when asked on the strategy to combat the growing sour loans. "The strategy is to segregate the NPAs according to their quality and then concentrate on recovering it. We will not allow any new NPA in our books this year. Even if there is a default for a single quarter, we will make the borrower pay back our money," the official said.

 

There are mainly three lists of defaulters classified under the A, B and C lists. "On the A list are companies where we plan to recover the loans by September. The B list comprises firms where we plan to retrieve loans by March and the assets on the C list will take a longer time to recover," an IFCI official said.

IFCI's NPAs increased from 8.27 per cent to 8.83 per cent of its net credit during 1997-98. In absolute terms the bad loans work out to about Rs 1,600 crore. The FI suffered a decline in net profit by 2.13 per cent to Rs 370.50 crore for 1997-98 on account of the provisioning against increased NPAs. It made a higher provision of Rs 403 crore against NPAs this year as compared with Rs 342 crore last year.

Sources said the FI wrote-off Rs 54.86 crore from its books of accounts against assistance extended to industrial concerns, as compared to Rs 19.99 crore in the previous year.

"The amounts written off pertained to only interest and no principal amount was written off," the IFCI official said. And these were writen-off with the approval of the competent authority as per the powers delegated by IFCI's board of directors, the official said.

He added that the "reasons for the write-off included reliefs and concessions due to rehabilitation packages under the aegis of the Board for Industrial and Financial Reconstruction (BIFR), reliefs granted as one-time settlement agreements and also reliefs and concessions granted as per institutional packages".

"The write-offs are a normal practice. This year we had to write off more because of the slump in the industrial situation," the official said. "Our rejection rate for credit support is growing. Even today we received five loan proposals and we chose only one. We have decided that we are not going for volumes, instead its the quality of the assets that will be important," he added.