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Sarbajeet K. Sen

NEW DELHI, July 24

THE Government appears to have decided to examine the IFCI revival issue right from scratch once again with the Finance Minister, Mr Jaswant Singh, having sought a fresh status-report on the institution from the financial sector division of his Ministry. According to official sources, the report has been forwarded to Mr Singh late last week.

The report has attempted to provide the Finance Minister a quick glimpse of the status of the present financials of the institutions, including its current repayment position and the amounts on which the institution has defaulted besides data on the current level of non-performing assets (NPAs).

It is being felt that the commissioning of the status report by the Finance Minister himself is an indication that the Government has an open mind on intervening to provide fresh support to the institution.

Pending with the Government is IFCI's request for sovereign guarantee to enable it to rollover institutional investment made in its debt instruments whose repayments commitments the institution is unable to meet due to liquidity problems.

Officials pointed out with new faces soon to assume office at North Block a fresh look at the measures that could help the institution on its way to recovery cannot be ruled out. The new officials to take charge soon are the new Finance Secretary, Dr S. Narayan, beside new advisors for the Finance Minister. The Finance Ministry already has seen changes recently with Mr D.C. Gupta taking charge as the new Secretary, Financial Sector, who would be directly looking into the revival of the IFCI.

Official said that there is considerable concern within the Finance Ministry over IFCI's future in view of the huge debt repayments that are falling due for the FI during the remaining part of the current fiscal as well as the repayment that would have to be made during the next year which include certain overseas borrowings.

"Some view has to be taken by the Government urgently on the revival of IFCI. Otherwise the levels of defaults would go out of hand by next year," officials said.

IFCI, whose losses have been mounting with every passing year with the March 31, 2002 losses standing at Rs 884 crore, has already apprised the Government of the measures suggested by its consultants McKinsey and Co for restructuring its business operations.

Meanwhile the institution itself has been making efforts to impress upon institutional stakeholders the need to come forward to help in easing its current liquidity problems.

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