New Delhi, Oct. 9: The Industrial Development Bank of India (IDBI) chairman P. P. Vora today met top finance ministry officials to press the financial institutionís case for a Rs 5,000-crore bailout package.
However, sources said no decision was taken on the issue. The ministry is finding it politically difficult to justify large bailout packages for financial institutions.
At a meeting held earlier where UTI was granted a Rs 14,500 crore bail-out package, several ministers had advised that state-run financial institutions should be asked to pursue defaulters instead of being given bailouts as this money was really being used to write off loans given to big business.
In 2001-2002, IDBI clocked a lower profit of Rs 424 crore as against Rs 691 crore in the previous year. Its net worth has eroded to Rs 6,654 crore for the year ending 2002 down from Rs 9,126 crore a year earlier. The institutionís bad debts have been on the rise since 1997. Non-performing assets rose by 17 per cent to Rs 10,466 crore (2001-02) from Rs 8,686 crore a year earlier.
Besides IDBI, the other development financial institution IFCI, which has non-performing assets (NPAs) of 22.4 per cent, has also sought an Rs 8,500-crore revamp package from the government.
Both the institutions have similar portfolios. IDBIís outstanding assistance to the iron and steel sector is 15.2 per cent which amounts to Rs 7,955 crore while that of IFCI is 24 per cent. IDBIís exposure to the textile sector is 9 per cent while that of IFCIís is 14 per cent.
Ministry officials say they will eventually have to hand out some kind of dole to the two FIs to help them tide over current problems but have also been asking these two FIs to restructure themselves internally.