Ifci Sets Its Eyes On A Nbfc

The Industrial Finance Corporation of India Ltd (IFCI) is looking to acquire a non-banking finance company (NBFC), says the institutions chairman and managing director K D Agrawal.

We have received some proposals. We may consider (acquiring a non-banking finance company) if a viable proposal comes our way, Agrawal said. He added that the plans are in a preliminary stage. He also did not reveal the names of the finance companies that have approached the FI.

We have had some preliminary talks with some finance companies. But things are at a very nascent stage. We are yet to study the balance sheets of these companies, another IFCI official said.

 

The IFCI revelation has not surprised officials in the para-banking sector. Because most NBFCs have found the heat of a difficult 1997-98 financial year coupled with stricter supervision norms enforced by the Reserve Bank in the year, more than difficult to handle and are believed to be desperately looking for buyers even while grappling with the problem of containing any asset-liability mismatch.

Almost all NBFCs are up for sale. They are looking for buyers and if they find one, they would only be too glad to get out of their business, an NBFC official said. NBFC sources point out that finance companies are looking for buyers among public sector banks and financial institutions.

Earlier this year, the Industrial Credit and Investment Corporation of India (ICICI) Ltd became the first financial institution to acquire ITC Classic, the beleaguered financial services arm of the tobacco company.

Sources point out that an NBFC in the stable of the a financial institution will help the FI develop a retail network. With universal banking fast becoming the norm of the day, term lending institutions do require a retail base to meet their short term lending commitments. FIs are no more supposed to provide long term funding. They are also being expected to cater to the working capital needs of corporates. Hence, they need matching deposits to create such short term assets, sources pointed out.