The restructuring of IFCI Ltd is expected to be completed by the end of the current financial year as banks have agreed to recast the institution's liabilities. The revamp will cover a third of the institution's liabilities, which was Rs 21,000 crore (Rs 210 billion) at the end of the last fiscal.
"All banks have agreed to restructure our liabilities worth Rs 7,000 crore (Rs 70 billion) and some of them have obtained approval from their respective boards," V P Singh, chairman of IFCI, said on the sidelines of a seminar on debt market organised by PHD Chamber of Commerce and Industry.
He said IFCI is in talks with other players to reduce the interest rates on the remaining debt and extend their maturity period. The package was cleared following government intervention. The centre too took over a part of the liabilities which included some lines of KfW and Asian Development Bank and also debt raised from retail investors.
IFCI had approached the government to assist it in the restructuring of liabilities worth over Rs 12,000 crore last year, as part of efforts to reduce its interest burden and asset-liability mismatch.
The government had directed banks to frame a package for IFCI, whose losses mounted to over Rs 514 crore in the first half of this fiscal, mainly on account of high interest outgo and non-performing assets. In addition, the institution had defaulted in meeting its repayment obligation to a number of institutional investors.
Although there was an initial resistance from banks to restructure the high-cost loans, the IFCI chairman said most of their boards have approved the scheme. On foreign loans, Singh said the FI has never defaulted on payments.
In addition to the restructuring package, a core group of bankers has been constituted to monitor the cash-flows of IFCI for at least six months.
A senior official in the finance ministry's banking division has also been designated to monitor the FI on a monthly basis.
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