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Money > Business Headlines > Report April 26, 2002 | 0955 IST |
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Banks say no to reinvesting in IFCISidhartha In a blow to IFCI's requests for rollovers on investments made by institutional investors to the tune of Rs 10 billion, banks have said they will not reinvest unless the Reserve Bank of India exempts them from treating the rollovers as non-performing assets. At a meeting of Industrial Finance Corporation of India chairman and managing director V P Singh with over half a dozen banks on Monday, the bankers asked IFCI to take up the matter of rollovers with the Reserve Bank of India. Banks are required to treat rollovers as non-performing assets and make provisions in accordance with rules stipulated by the RBI, which some of them are averse to. IFCI sources said the central bank was considering the proposal. Officials of the State Bank of India, Punjab National Bank and Bank of Baroda as well as those from the finance ministry and the RBI attended the meeting. Officials said IFCI had approached banks to seek rollovers on investments made by them in its bonds, including SLR bonds, maturing over the next few months. The cash-strapped institution is also facing problems in securitising its assets. Some bankers told Business Standard that of the institution's asset base of Rs 187.55 billion at the end of financial year 2000-01, only about one-third could be securitised. The remaining consisted of either NPAs or projects under implementation. IFCI, grappling with an asset-liability mismatch, is taking steps such as rollover of investments, securitisation and sale of assets to raise liquidity. The steps are crucial because the institution's resource-raising abilities will be under pressure following ICRA's announcement of a rating downgrade earlier this week. Other agencies, Care and Fitch, had also put IFCI on a rating watch following defaults to institutional investors. IFCI executives, however, maintain there is no threat to the interests of retail investors. "We have an excellent record of meeting obligations to retail and foreign investors, and we will keep it clean," said an executive. ALSO READ:
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