As per the Reserve Bank of India norms, exposure to a business group cannot exceed 50 per cent of an institution's networth. However, the RBI has allowed an additional 10 per cent exposure to infrastructure companies.

Addressing a meet on its performance and future plans, IFCI CMD P V Narasimham said the institution had decided to restrict exposures to a group or business house to 30 per cent and to an individual company to 15 per cent by 2001-2. ``Funds to the Essar and Ispat groups have exceeded 50 per cent of IFCI's networth,'' Narasimham revealed, adding, ``this had to be viewed in the context of the institution's shrinking networth.''

IFCI has identified seven industry sectors including cement, steel and paper, which will not receive additional funds tillfurther review. IFCI will kick off restructuring exercises in the Modern Group, JCT, Flex and Prakash Industries in a bid to strenghten its non performing asset (NPA) recovery drive. The institution is also planning its rights issue in October or November to raise Rs 3,570 million. The issue will be at par. Post-issue, the capital adequacy ratio and debt-equity ratio are expected to be 9:1 and 10:1 by March 2000, as per Reserve Bank of India guidelines.

It has also retired Rs 450 crore of high cost funds and replaced them with cheaper funds. Total net borrowings came down to Rs 16.57 billion in 1998-99 as against in Rs 28.99 billion the previous year. Fund-based disbursements were Rs 38.93 billion. "We will try and grow at less than 10 per cent only. The focus will be on short term products like working capital requirements and bill discounting," Narasimham said.

Large non-performing assets for the year ended March 1999 was 21.5 per cent. Gross NPA was Rs 5000 crore and net Rs 4234 crore. The 94 per centdrop in profit after tax for the period was mainly because of provisioning from profit and loss account for sub-standard and doubtful assets. Sub-standard assets were 13.4 per cent and accounted for a majority of NPAs.

IFCI has restructured seven cases of large NPAs. Restructuring for 11 more cases was likely to formulated in the current year, Narasimham said. Recovery was feasible through enforcement of security in four more cases.

The textile sector accounted for the maximum percentage of NPAs at 13.1 per cent (Rs 5162.6 million) followed by iron and steel at 11.4 per cent (Rs 4495.4 million) and metal/steel products at 9.1 per cent (Rs 3585.5 million).