Rs 1,000-cr bailout for IFCI approved by govt
New Delhi—The government has approved a Rs 1,000-crore bailout package for beleaguered financial institution Industrial Finance & Investment Corporation of India (IFCI).
Of this, Rs 400 crore will be infused to IFCI’s tier-I capital by way of 20-year convertible bonds and the remaining will be contributed by the major shareholders of IFCI -– including the Industrial Development Bank of India.
The fresh infusion of capital will help IFCI tide over its current problems on account of a low capital adequacy ratio.
IFCI said that it would be in a position to make repayments to its bond-holders. The current controversy over IFCI’s downgrade by rating agencies was sparked off by IFCI’s inability to repay its loans.
IFCI, has in the meantime reported a sharp 268 per cent fall in profits and reported a net loss of Rs 27.80 crore during the first quarter of this fiscal against Rs 16.55 crore net profit in the same period of 2000-01.
The fall in profits was due to decline in income from operations to Rs 635.55 crore and a higher provisioning of Rs 26 crore towards bad and doubtful debts and investments.
To make matters worse, the FI also incurred an expenditure of Rs 612.99 crore towards interest outgo and cost of borrowings during the quarter, which is slightly lower than Rs 628.32 crore in 2000-01. IFCI had posted a Rs 265.93-crore loss in 2000-01.
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RBI not to allow banks to close branches
Mumbai—The Reserve Bank of India (RBI) has directed public sector banks not to close down branches due to shortage of staff. The strength of most public sector banks has come down by 10 per cent and as many as 99,425 employees have opted for the voluntary retirement scheme offered by the public sector banks with the total package having cost Rs 10,073 crore to the banking sector.
Due to the virtual exodus of employees banks are finding it difficult to manage wide network of branches post VRS and are considering merging or closing down some of their branch offices.
The RBI also asked banks to ensure that lending under various schemes in rural areas was not adversely affected due to this scheme.
RBI is of the view that public sector banks introduced VRS with the objective to right size manpower.
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