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Bailout package for IFCI next week: Jaswant

The Cabinet Committee on Economic Affairs has decided to announce a bailout package for the ailing Industrial Finance Corporation of India next week.

This was disclosed by Finance Minister Jaswant Singh in New Delhi on Saturday after he announced the CCEA decision on the beleaguered Unit Trust of India. A similar bailout package will be announced for the Industrial Development Bank of India soon, Singh said.

The financial institution has been facing serious asset-liability mismatch with credit rating agencies branding the FI as "below investment grade".

It has huge non-performing assets at 21 per cent, which worked out to around Rs 4,000 crore (Rs 40 billion).

Because of the poor health of its finances, IFCI recently defaulted in external payment of $100 million besides interest payment of Rs 300 crore (Rs 3 billion) to the trustees of Employees Provident Fund, which has parked some of its investments in the financial institution.

As a result of difficult financial situation, IFCI has not been able to carry out the core business of lending.

Recently, international financial consultancy firm McKinsey had recommended splitting IFCI into two companies.

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