Jan. 30: Industrial Finance Corporation of India (IFCI) today said net loss has almost doubled in the third quarter of 2002-03 due to low income.
The institution has reported a loss of Rs 95 crore in the reporting quarter, up from Rs 48 crore in the year-ago period. Operational income stood at Rs 443 crore for the three-month period (October-December) down from Rs 638 core in the corresponding previous period.
Recently, the government along with lender banks had agreed to restructure the institution. As part of the deal, the banks had agreed to ‘cutbacks in debt recoveries’ from it.
In accordance with the package, the government also has agreed restructure the statutory bonds which qualify for the banks’ Statutory Liquidity Ratio (SLR).
The restructuring of bonds would help IFCI to improve its capital adequacy ratio and provide relief in terms of interest costs.
While statutory bonds maturing after April 1, 2002 will be renewed at market rates, the non-statutory bonds will be divided in two equal parts and renewed at a zero coupon and a 6 per cent rate for a 20-year term, respectively.
As a development financial institution, IFCI has provided long-term loans to a host of companies over the years. But, over the past few years, the principal of borrowing short and lending long had led to severe asset-liability mismatches coupled with payment defaults by around seven to eight well-established corporate groups.
The institution, to recover the non-performing loans, has formed an asset reconstruction company (ARC) with a paid-up capital of Rs 20 crore. It is currently talking to a couple of foreign and Indian institutional investors for investing in the ARC.