The erstwhile Industrial Reconstruction Bank of India, which was transformed into the Industrial Investment Bank of India (IIBI) at the beginning of this fiscal, experienced a 9 per cent decline in total sanctions in 1996-97. The operating profits rose by 13 per cent to Rs 47.61 crore.
Financial results of 1996-97, which is the last financial year of IRBIs existence, show that sanctions went down to Rs 816.01 crore from Rs 897.26 crore clocked the previous year.
IIBI chairman G Goswami attributed this decline to the changing profile of operations in the last fiscal.
However, disbursements grew by 4 per cent to Rs 549.6 crore in 1996-97 from Rs 528.59 crore in the previous financial year. Besides, there was a much sharper growth at 51 per cent in disbursements under the fixed asset financing schemes.
Since these schemes are essentially of a longer maturity, there has been a fall in principal recovery from Rs 250.69 crore in 1995-96 to Rs 190 crore in 1996-97, says an official release.
The aggregate income during the year grew over 29 per cent at Rs 230.07 crore. The increase in cost of borrowings was due to the hardening trend in interest rates. The institution could, however, absorb this increased cost, and register an enhanced operating profit.
IRBI has so far mobilised around Rs 210.17 crore through issue of unsecured, privately placed bonds in a number of tranches.
IIBI, the new avatar of IRBI, has started out with a low equity base of Rs 72.75 crore. It currently has earnings per share of Rs 6.54, and a book value of Rs 16.76 as on March 26, 1997.
Although we are keen to lend for infrastructure projects, we are unable to do so because of the mismatch in mobilisation of resources. While we are lending for 10 years and more, we are more into short term borrowing for which we have to pay interest every 5 years, said Goswami. Total expenses of the institution went up by 34 per cent to Rs 182.46 crore. Cost of borrowings went up by 38 per cent to Rs 165.65 crore.
