Industrial Finance Corporation of India (IFCI) is considering converting IFCI Financial Services Ltd (I-Fin), its 100 per cent subsidiary, into a primary dealer (PD).
With net non-performing assets (NPAs) rising to 22.21 per cent (Rs 3,897.60 crore) on March 31, 2002, from 20.99 per cent, the financial institution is looking at sources of diversifying revenue streams, sources said.
Reduced operations of IFCI on account of huge sticky assets has prompted it to consider such a move.
The PD proposal, however, is subject to the Centre and majority shareholders like IDBI further infusing funds to bail IFCI out.
As part of a rescue package already Rs 400 crore has been pumped into the FI, which posted a net loss of Rs 884.27 crore as on March-end 2002 as against a net profit of Rs 64.57 crore in the previous year, and more funds are in the pipeline.
For starting a PD the minimum capital requirement is pegged at Rs 50 crore. I-Fin's share capital as of March-end 2002 stood at Rs 6.75 crore. For converting I-Fin into a PD, IFCI will be required to infuse Rs 43.25 crore.
I-Fin is a member of the National Stock Exchange and operates in the capital market, wholesale debt market and futures & options segments of the exchange. The company has also acquired membership of the Delhi Stock Exchange from IFCI.
The company is looking to increase its focus on stock broking activities and on increasing its client base. It is seeking empanelments from foreign institutional investors, which are more active in equity and futures & options segments, and mutual funds, which are active in the equity and debt segments.
Also on cards is retailing of insurance products by becoming insurance broker and corporate sales agent.
