IIBI to transfer Rs 600 crore sticky assets to ARC

The Industrial Investment Bank of India (IIBI) would be transferring its non-performing assets (NPA) at Rs 600 crore to one of the asset reconstruction companies "" either Asset Reconstruction Company of India (Arcil) or Asrec India Ltd.

It is also likely to ask the government to write off its accumulated losses at another Rs 600 crore to make it a better takeover candidate.

Chairman, IIBI, O N Singh, told Business Standard, "We are evaluating the possibility of transferring IIBI's NPAs to one of the ARC which will help clean the company's balance sheet. Talking over the possibility of merger of IIBI, he said there are two issues that need to be addressed if the DFI has to make itself a better takeover candidate. One being the huge NPA the bank has accumulated over the last few years and the large losses that has amounted to around Rs 600 crore."

IIBI was created as a vehicle to takeover assets of sick companies, and had in the process itself turned sick.

The former chairman Madhukar had earlier said that with financial re-engineering and better deployment of funds available to the entity, it was now in a relatively better shape.

IIBI had in fact recorded a surplus of Rs 2 crore in the third quarter "" where its overhead was around Rs 6 crore while and it managed an income of Rs 8 crore. IIBI is also in the midst of a voluntary scheme that attracted around 70 applications. The DFI has around 265 employees.

The DFI had in the third quarter recovered Rs 53 crore of bad assets against Rs 35 crore achieved in the last fiscal.

Meanwhile, the employees of IIBI had demanded merger of the investment bank with Industrial Development Bank of India (IDBI) and had also made an representation to the centre.