Government to infuse Rs 200 crore in India's oldest term lending institution IFCI next fiscal

The government has decided to pump Rs 200 crore into IFCI, the country's oldest term lending institution, through the preferential allotment route next fiscal to shore up its capital and enhance operations, sources said. Government of India holding in the non-banking finance company, which stood at 56.42 per cent at the end of December 2019, would increase after the capital infusion.

"The (Rs 200 crore) provision is for equity support to Industrial Finance Corporation of India (IFCI) keeping in view the business programme and capital requirement," as per the Budget documents presented in Parliament last month. For the current fiscal as well, the government has earmarked Rs 200 crore capital infusion for IFCI, as per the Revised Estimate.

Established in 1948 as a statutory corporation, IFCI currently has subsidiaries and one associate under its fold. By the early 1990s, it was recognised that there was need for greater flexibility to respond to the changing financial system. It was also felt that IFCI should directly access the capital markets for its funding needs.

It is with this objective that the constitution of IFCI was changed in 1993 from a statutory corporation to a company under the Indian Companies Act, 1956. Subsequently, the name of the company was also changed to 'IFCI Ltd' with effect from October 1999.

However in 2015, the government again raised its stake in the firm to over 51 per cent, making it a public sector company. For the third quarter ended December 2019, IFCI reported a consolidated net profit of Rs 335.38 crore as against a net loss of Rs 31.66 crore in October-December period of the previous fiscal.