IFC exposure to GTB, Centurion turns sticky

Our Banking Bureau

Mumbai, Oct 30: A top official of International Finance Corporation (IFC) has said that the institution’s exposure to the two new generation domestic private sector banks — Global Trust Bank (GTB) and Centurian Bank — is turning sticky.

“The banks have started defaulting in their repayments to IFC,” said the officials, adding that the institution is reviewing the situation.
Despite the bad experience with GTB and Centurion, the IFC top official said that the investment wing of the World Bank is negotiating with another domestic bank for investing a substantial sum.

IFC is planning to invest over $400 million in various domestic sectors during the current fiscal.

According to Mrs Rita Bhagawati, an economist with IFC who is also the Business Development Officer, Multilateral Investment Guarantee Agency (MIGA) IFC, has identified areas including auto,
pharmaceutical and financial sector as promising for investment.

“During 2000-2001, IFC’s exposure in India among various countries was the largest which we would like to match during the current fiscal,” she said adding that it would be done by way equity and debt.

“Our debts are fairly long term and as good as equity,” she said.
When contacted, GTB officials denied that there is any problem with IFC’s exposure in the bank. “IFC has been with us in good times and they will stay with us in bad times as well, they added. IFC holds about 10.5 per cent stake in the bank,” they said.