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India approves capital infusion in IFCI

The government on Wednesday approved a Rs 10-billion capital infusion in cash-strapped state-run term lender IFCI to boost its capital adequacy ratio, a senior official said.

"The government will contribute Rs 4 billion as capital infusion in IFCI. This will be by way of convertible debentures of 20-year maturity which will qualify for tier-1 capital," U K Sinha, joint secretary in the banking division of the finance ministry, told reporters.

The balance Rs 6 billion will be contributed by IFCI's major shareholders through 'appropriate instruments'.

IFCI was placed on a rating watch by a local rating agency ICRA last week. Global rating agency Moody's Investors Service said it had put IFCI's Ba2 issuer rating on review for a possible downgrade after the term lender had delayed payments on some bonds.

The chairman of the state-run developmental financial institution said last week his company had a temporary cash flow mismatch but added that it would meet all its commitments.

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