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Govt mulling revival package for IFCI

The government is discussing a restructuring package for cash-strapped state-run term lender IFCI Ltd but no decision has been reached, a senior official said on Thursday.

"We are still discussing different possibilities but nothing has been finalised," the finance ministry official, who did not wish to be identified, told Reuters.

Domestic newspapers have said the government was expected to announce a bailout package this week for the domestic financial institution which is saddled with bad debts.

The government has said it is concerned about IFCI's liabilities involving foreign borrowings, retirement funds and retail investments.

IFCI, set up in 1948, was India's first financial institution established to provide credit to medium and large industry.

Any bailout would be the second in two years for the troubled lender. In 2001, the government approved a Rs 1,000-crore (Rs 10-billion) capital infusion for IFCI to boost its capital adequacy ratio.

In August, India announced a comprehensive bailout package for state-run mutual fund manager Unit Trust of India, covering a massive shortfall in its ability to repay investors in assured return schemes.

UTI, which manages half the Indian mutual fund industry's assets of about $20 billion, stunned investors last year when it froze redemptions from its flagship fund, US-64, for the rest of 2001.

The official added the government was "looking at ways to strengthen" another state-run term lender, the Industrial Development Bank of India, also hit by bad debts.

"We're not working out a bailout package for IDBI. It doesn't need one," he said.

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