IFCI chairman and managing director V P Singh today said that the Reserve Bank of India has agreed to grant it forbearance from regulatory norms to help the institution tide over the problems of capital adequacy ratio and exposure norms.
"RBI has agreed to grant forbearance to your company from regulatory norms during the transitionary phase," Singh said at IFCI's ninth annual general meeting.
IFCI's capital adequacy ratio at the end of 2001-02 was 3.12 per cent as against the RBI prescribed 9 per cent. At the end of the previous financial year the capital adequacy ratio was 6.22 per cent.
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Singh also said that if the proposal of capital infusion and restructuring of debt came through, IFCI would be back into profit next year.
The IFCI chairman also told shareholders that the restructuring plan suggested by McKinsey, which has been accepted by the FI's board of directors, envisages separation of NPAs or bad assets of the ailing institution from its interest earning or good assets.
While asking IFCI to transfer all its NPAs to its ARC _ Asset Care Enterprise _ Singh said, the consultant suggested the business model for the good bank entails merger with a "potential universal bank".
McKinsey also suggested that IFCI should adopt a stand-alone structure as a mid-corporate service provider with thrust on asset financing, IPO management, syndication, project financing, receivables financing, merger and acquisition, and project advisory.
Highlighting the importance of development financial institutions (DFIs) in India, Singh said, "The infrastructure sector alone requires Rs 20,00,000 crore investments in the next 15 years. Since the Indian capital market lacks depth and stability, the continuance of DFIs can be considered sine qua non for the growth of industrial and infrastructure sector."
Singh said IFCI was exploring possibilities of tie ups with reputed international strategic partners for the proposed stand-alone entity and the ARC. Referring to NPAs, he said, the institution has already set up its ARC with a capital of Rs 20 crore and the FI would shortly complete the entire exercise of transferring NPAs to that company.
The shareholders approved the appointment of Indian Institute of Management's I M Pandey as a new director on the board, while clearing the reappointment of Ashok Lahiri, director National Institute of Public Finance and Policy.
They also ratified the appointments of VP Singh as chairman and managing director IFCI and chartered accountant S Ravi as a director on the board.