New Delhi, Dec. 2: State-run banks today finalised a long promised loan-restructuring package for ailing financial institution IFCI.

The loan restructuring package valued at Rs 6,000 crore involves an extension of the maturity periods for loans and reducing interest payable to just over 6 per cent.

The bankers’ consortium was prodded into finalising the deal by the finance ministry that was faced with the prospect of funding a revival package for the FI close on the heels of announcing a Rs 14,000-crore bailout for UTI. IFCI had earlier sought a Rs 12,500-crore bail out from the government.

“IFCI’s liability restructuring package has been finalised,” chairman V. P. Singh confirmed after a meeting with bankers and stakeholders here.

The Rs 6,000-crore package comes on top of a government guarantee that it will as a last resort pay up foreign currency loans taken by IFCI.

Today’s meeting was a follow-up of a similar meeting held last week. The package was finalised by a group comprising top officials of IFCI and IDBI along with those from Life Insurance Corporation, State Bank of India, Punjab National Bank, Bank of Baroda and Oriental Bank of Commerce.

The deal will now have to be placed before the boards of the various lending banks for their approval. Both statutory and non-statutory bonds would be restructured, enabling IFCI to improve its capital adequacy ratio and provide relief in terms of interest costs.

IFCI’s sorry state of affairs has been attributed to payment defaults by around seven to eight well-established corporate groups, each to the tune of Rs 800-1200 crore and the discontinuation of these SLR bonds by the Reserve Bank of India. The term finance institution also lost large sums due to huge outstandings from the steel and textile sectors—24 per cent and 14 per cent respectively.

For the year ending March 31, 2002, IFCI reported a net loss of Rs 884 crore. The institution’s non-performing assets now stand at about 22.4 per cent. The FI has long planned to move towards being a multi-product company and specialise in term credit for small and medium enterprises and this loan restructuring should help it in moving in that direction.

The financial institution has already decided to divide its business activities into two groups to synchronise with market demand—one, that will focus on corporate advisory and fee-based activities, while another will be a business development group.