Financial Express: IFCI to raise Rs 6,000 cr, plans Rs 3,000 cr bonds

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IFCI to raise Rs 6,000 cr, plans Rs 3,000 cr bonds

PRESS TRUST OF INDIA

New Delhi, August 23: The Industrial Finance Corporation of India (IFCI) plans to raise Rs 6,000 crore in 1998-99, including Rs 3,000 crore through a public issue of bonds, to fund projects, chiefly infrastructure.

"The amount will be raised in various tranches through private placements and partly through a public issue of bonds, for which a prospectus will be submitted to Sebi shortly," chairman and managing director PV Narasimham said.

Narasimham said the corporation would also mobilise funds through fixed deposits from the public. On the public issue, he said the corporation would submit an "umbrella prospectus" to Sebi.

Under an umbrella prospectus, a financial institution or a corporate raises money in different tranches and does not have to approach Sebi every time it seeks to tap the primary market.

Its peers, including IDBI and ICICI, have already received permission from capital market regulator for their umberella prospectuses.

The funds being raised by the corporation will be on-lent to infrastructure secto, especially power and telecom, he said. Narasimham said the institution had shown a 30 per cent growth in disbursals in the first four months of the 1998-99 financial year.

"This is in line with the IFCI's projections of a 30 per cent growth for the entire year", he said. Bulk of the disbursals went to fund projects in the power and telecom sectors, he said adding that investors were more keen to invest in these sectors because of high returns they offered.

The situation was similar to the Eighties, when corporates were investing in the cement and steel sectors which were then booming, he said. Today, these investors have moved away from such areas to other industrial sectors like power and telecom because of higher returns they offered, Narasimham said.

Asked about plans to diversify its operations, he said the corporation proposed to enter into advisory services. Much of the funding is for project finance, he said, adding as much as 90 to 95 per cent of its lending profile is constituted by this, which will be reduced over a period of time.

Narasimham said IFCI would, however, not get into personal banking activities like housing, car and other consumer finance schemes. He admitted that level of non-performing assets in the corporation was over 8 per cent.

Stating that this level of NPAs was not manageable, Narasimham said, ``We would like to bring it down to 4 to 5 per cent in next two years. This would be a reasonable level."

Asked why the corporation's lending was restricted more to north, he said that 30 per cent of its total lending went to the northern region. ``We propose to increase lending in other regions as well,'' he said.

Narasimham explained that lendings in general topped in the region where a corporation was headquartered. Since IFCI was based in the north, lendings were higher, and this is true of other financial institutions as well, he added.

Net Express

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