While Rai could not be reached for comment, a senior IFCI executive confirmed he put in his papers after the ministry asked him to do so. Ministry officials said he’d been asked to go.
In an interview with Business Standard last year, Rai, after being re-appointed by the company board for another five-year term, had said once the control of IFCI went into the hands of the government, it might go for a chief of its choice. Almost half the company’s independent directors stepped down from the board of IFCI after the government acquired majority stake in it around that time.
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The immediate trigger for Rai’s being asked to go is reliably reported to be the retirement of Vinod Rai as Union comptroller and auditor-general. Finance ministry officials would not come on record on this. “We did not do anything so far, since it was thought the government was targeting the CAG through Atul Rai,” said one, on condition of anonymity.
Parliament’s Committee of Privileges had, some years before, questioned Atul Rai’s appointment. There was also a controversy when an MP had complained to the panel of Rai having allegedly misbehaved with him when he’d gone to the IFCI office in early 2010.
The government had been giving financial assistance to IFCI in the form of debentures from 2001 to 2007. Later, a committee headed by then Finance Secretary R S Gujral had been formed to look into certain issues. Subsequently, in August 2012, the Cabinet approved conversion of debentures worth Rs 923 crore that the government held in IFCI into shares at par. The government holding in the company rose to 55.57 per cent and it formally became a government-owned company, a tag it had not had for some time.
The Industrial Finance Corporation of India was established in 1948 as the first development financial institution in the country, to cater to the long-term financing needs of the industrial sector. After the reforms of the early 1990s, the constitution was changed in 1993 from a statutory corporation to a company. Subsequently, the name of the company was changed to IFCI Ltd.