The Hindu Business Line : Decision on IFCI merger put off to next fiscal; closure ruled out

The officials at the Ministry of Finance have decided to wait till the turn of the current fiscal to pronounce their vision for the ailing institution.

While pushing the decision on IFCI's future to the next fiscal, the Ministry officials ruled out any plans to administer a mercy-killing dose to force an early closure of the institution. "We will take a view on IFCI's future in totality next fiscal. However, shutting down the institution has never been an option under consideration," a top official of the Finance Ministry said.

Recently, there has been speculation that the Government has decided to shut down IFCI since finding a taker was becoming increasingly difficult.

Officials said that the delay in taking a view on IFCI was due to the fact that IDBI Ltd, which has been one of the top contenders for taking it over, was itself undergoing a restructuring. IDBI Ltd was formed after merging the erstwhile IDBI Bank with its parent institution, Industrial Development Bank of India.

"IDBI Ltd is in the final steps of fully integrating IDBI Bank with it. We will have to wait till that process is complete before taking a view on the merger possibilities for IFCI," officials said.

They said that candidates such as IDBI Ltd (which was earlier opposed to the merger) have been taking a fresh look at IFCI since the institution has been showing healthy recoveries.

"The progress of IFCI has been on track. Recoveries have been good and the picture might be better at the end of the fiscal," the official pointed out.

IFCI currently does not disburse fresh loans and is concentrating its energies on recoveries of non-performing assets. While IDBI Ltd remains the main contender for taking over the institution, other names that cropped up at different times are Punjab National Bank and Life Insurance Corporation.

At one point, the deal with PNB had appeared to be sealed with the board of directors of both institutions adopting a simultaneous resolution for the merger.

However, political opposition and PNB's demand for Rs 3,000 crore as compensation forced the Government to drop the plans.

LIC's namealso cropped up in official discussions since it was felt that IFCI, with its expertise in corporate lending, could function as the appraisal arm for the insurance giant's infrastructure exposure.

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