New Delhi, Aug. 9: The government has extended the tenure of V. P. Singh, chairman and managing director of IFCI, by four months till January 31 next year.
Singh was to retire on September 30. He headed the state-owned development bank for the last two years, most of which was spent in making out a strong case for a bailout package for the debt-laden bank.
“Chances are that his term might be extended,” an official said.
Last week, the government sought Parliament’s approval for an additional Rs 1,573 crore budgetary support to restructure IFCI. “The grant will help IFCI improve its capital adequacy ratio, which is currently at 3 per cent against the Reserve Bank’s stipulation of 9 per cent and also provide relief in terms of interest costs,” officials said.
Last December, state-run banks and FIs, including officials of IFCI, IDBI, Life Insurance Corporation, State Bank of India, Punjab National Bank, Bank of Baroda and Oriental Bank of Commerce, had worked out a Rs 6000-crore loan restructuring package. According to the package, the higher interest bearing funds of 14-16 per cent were to be replaced with a lower interest rate of 6 per cent.
Analysts feel a depressed capital market in the mid-90s and a change in the operating environment due to the lower interest regime undermined IFCI.
“The financial sector liberalisation introduced a competitive relationship among FIs which forced IFCI to take large exposures to several greenfield projects, especially in steel and oil, which suffered from cost and time overruns,” a committee appointed to suggest a restructuring plan for the institution.