After providing a succour of Rs 14,561 crore to the Unit Trust of India, the finance ministry is working on a Rs 8,000 crore bailout package for beleaguered financial institution IFCI Ltd. It is also in favour of a structured and orderly winding up of the institution.
According to senior government officials, the proposal will soon be taken up by the Cabinet Committee on Economic Affairs. The financial assistance is likely to be provided through issuance of government bonds. This would mean there is no immediate cash outgo for the government.
While the government hopes to realise more than 25 per cent from the bad assets, estimated at over Rs 10,000 crore, the good assets can be sold piece meal to several buyers. Once the shortfall of Rs 8,000 crore on floating rate notes (FRN), retail investors, provident funds and SLR bond liabilities are taken care of, it will not affect the financial system.
As with UTI, the IFCI package will involve categorising the assets and liabilities of India