A string of public sector banks has started negotiating with the Delhi-based beleaguered term lending institution IFCI to buy out its assets.
Bank of Baroda (BoB) is planning to buy out Rs 250 crore worth of IFCI assets. The bank is also closely looking at a chunk of IFCI's foreign currency assets for a possible buyout.
Among private sector banks, UTI Bank is in talks with IFCI to pick up around Rs 150 crore of the institution's assets. These assets are corporate assets rated AA and A.
"Bank of Baroda is conducting a due diligence process. The quality of assets, pricing and all other relevant things are being taken into account. The assets will be transferred from the books of IFCI to Bank of Baroda and the bank will start earning interest on them," said a source.
The institution had in the previous fiscal too sold more than Rs 1,500 crore worth of its loans.
UTI Bank, ICICI, Life Insurance Corporation of India (LIC) and General Insurance Corporation of India were among the banks and institutions which had taken over these assets. The institution had sold a mix off of AAA and AA corporate assets.
The objective of these sell off was to generate liquidity. IFCI will have to cough up Rs 4,500 crore to meet its repayment obligation including foreign currency debt in the next 10 months, and another Rs 5,000 crore in the next fiscal.
A majority of the 17 banks and institutions which had been approached by IFCI, for rollover of the institutions bonds, have decided against any fresh reinvestment. Banks and FIs had provided rollovers in the order of over Rs 500 crore last financial year. IFCI has recently made a presentation to a clutch of banks to sell part of its assets.
The gross non performing assets (NPAs) of the ailing institution was at 29.05 per cent in March 2001 which is expected to go up in fiscal 2002 as the quantum of assets goes down following the selloff. Through the selling of assets, IFCI is planning to generate liquidity to meet its liabilities.
