New Delhi, Oct. 8: I-Fin, the financial services wing of the ailing IFCI, has requested the Securities and Exchange Board of India (Sebi) to transfer the parent body’s depository licence to it.
IFCI officials said the licence would enable the merchant banking outfit to commence retail segment operations in stock broking and depository business activity, which could perk up receipts.
“We have filed an application both with the National Securities Depository Limited and Sebi, for transfer of the existing depository licence which will help us enter the mass market,” he said.
Sources said the capital markets regulator is expected to give the necessary clearance in another month.
Analysts say the licence will infuse much-needed funds as volumes in IFCI’s term-lending business have headed south.
I-Fin is a wholly owned-subsidiary of IFCI and is currently registered with the NSE for trading in the capital market, futures, options and wholesale debt markets. Its clientele comprises mutual funds, banks and financial institutions.
When asked to comment on reports that I-Fin was being converted into a ‘primary dealer,’ the official said, “Not that I am aware of”.
IFCI is looking at different ways of generating revenues since it has a net deficit of Rs 884.7 crore for the year ended March 31 2002, and is straddled with a whopping 22.1 per cent of non-performing assets (NPAs) worth Rs 3,897 crore. The RBI has fixed 15 per cent as the danger level.
The depository business, where shares are held in demat form, will be another way to raise resources since it is a fee-based income activity. The demat system refers to share transfers registered electronically.
Sources say I-Fin also plans to enter the insurance sector and will soon initiate talks with major insurance players. “We are taking steps to enter into retailing of insurance products as we feel it has growth opportunities as far as the financial services sector is concerned,” he said.
IFCI has reported a higher loss of Rs 222 crore (due to an increase in non-performing assets and lower income) in the first quarter of 2002-03 up from Rs 27.8 crore in the year-ago period.
Sources say though the company has sought a bailout package, which includes government guarantees and a cash infusion worth Rs 5,000 crore in cash or bonds or a mixture of the two, it will be tough to come by.