IDBI chairman GP Gupta said that he has asked the IFCI management to set up an independent committee of experts or an agency to evolve viable ways for restructuring the IFCI which in recent times has been suffering from a high rate of non-performing assets (NPAs) and lower capital adequacy ratio. In the process of restructuring, if required, Gupta said he would not rule out the possibility of merger or alliance of IFCI with IDBI.

IFCI chairman PV Narasimham, however, does not foresee a merger with IDBI despite the Mumbai-based term lending institution subscribing to its portion of IFCI's Rs 352 crore rights issue.

"Ownership is not important. Even if IDBI owns 100 per cent of IFCI, we still can be different," Narasimham said. IFCI would maintain its separate identity by focussing on small and medium scale enterprises and IDBI on large corporates, he said, adding afterall IDBI is eight times larger than IFCI. However, no agreement on segregating the focus areas has been formalised between the two financial institutions. "We have not entered into talks with IDBI on this issue," he said.

According to Gupta, the study by the independent committe would go through all aspects that concerned with the revival of IFCI which is in recent months, re-emerging on growth path. In fact, IDBI itself is in the process of the restructuring its business strategy to migrate itself into a universal banking conglomerate while venturing into niche area like software business by floating a fully-owned subsidiary.

The Centre has given a grant of Rs 190 crore and subscribed an additional Rs 400 crore towards preferential shares for the next 20 years in order to enhance the capital adequacy ratio of the institution. IDBI also took a much delayed decision to subscribe to its portion of preferential shares of IFCI. All these financial inputs would certainly improve the bottomline of the IFCI in the coming months. In the first nine-month of the current financial year, IFCI made a profit of Rs 40 crore, Gupta said.

The IDBI agreed to subscribe to its portion of the issue entailing an outgo of Rs 101 crore on February 18, a day before the deadline to the issue. A visibly relieved Narasimham refused to divulge whether the rights issue has been fully subscribed. "wait for a few more days for details'', he quipped. It is expected that even if the rights issue is fully subscribed, ifci will still fall far short of the required 9% CAR by March 31, 2000. The IFCI's capital base has been eroded as it had to make provisions of Rs 800-1000 crore for bad debts and had paid dividends from its reserves.