The Finance Ministry has set up a high-level panel to take a view on the government's future role in the country's oldest financial institution IFCI.
Last week, Finance Minister Pranab Mukherjee cleared the setting up of the panel headed by Finance Secretary R S Gujral, official sources said.
Last year, the Finance Ministry had initiated the process of appointment of a consultant to undertake a study on key strategic issues related to the company. However, it did not reach the logical conclusion.
The move to set up a panel now comes three years after an abortive attempt to induct a strategic partner in IFCI after the company did not agree with the demand of the highest bidder, Sterlite-Morgan Stanley JV, for management control.
The main hurdle in the way of stake sale is the lack of clarity on the optionally convertible debentures (OCDs) worth Rs 523 crore issued by the government. Also, the government has issued OCDs worth Rs 400 crore maturing in 2021.
"It (the committee) will decide on everything, whether it is our holding via debentures or the loan guarantees that the government has provided to the IFCI," a source said.
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The committee will decide on whether to convert OCDs into equity or not, sources said.
If these debentures are converted into equity, the government will have a direct equity holding in the company.
Besides, there is also a Rs 2,270 crore (as on March, 2011) outstanding government guarantees to various bonds issued by the financial institution.
At present, the government does not have any direct stake in IFCI. State-owned insurance firms and financial institutions, such as LIC, IDBI Bank and Punjab National Bank, own around 28.5 in the entity.