Government to Inject Rs 5 Bn in IFCI to Boost Financial Health

26 Dec 2024 CW Team

The government has decided to inject Rs 5 billion into the state-owned IFCI to enhance its financial stability ahead of the company's proposed restructuring and integration into a larger group.

With this capital infusion, the government's stake in the company is expected to rise from the current 71.72 per cent as of September 2024.

This capital infusion was approved through the passage of the first Supplementary Demand for Grants for 2024-25 in the Lok Sabha last week.

The Supplementary Demand for Grants for 2024-25 allocated an additional Rs 4.99 billion for the 'Subscription to the Share Capital of Industrial Finance Corporation of India (IFCI)'.

The Supplementary Demand for Grants also noted that considering savings of Rs 500.07 million in the same section of the grant, the remaining Rs 4.49 billion will be met from the surrender of savings in the capital section of Demand No.30-DEA, and this would not result in any additional cash outflow.

Earlier in the year, IFCI had raised Rs 5 billion by issuing equity shares to the government.

The Industrial Finance Corporation of India was established by the government on July 1, 1948, as the first Development Financial Institution in India.

For the second quarter ending in September 2024, IFCI reported a loss of Rs 220 million, and for the first half of FY24, the company recorded a loss of Rs 1.70 billion.

As part of its revival and restructuring, the Department of Financial Services (DFS), Ministry of Finance, approved in principle last month the 'Consolidation of IFCI Group,' which involves the merger or amalgamation of IFCI with StockHolding Corporation of India and other group companies.

The proposed plan includes merging StockHolding Corporation of India, IFCI Factors, IFCI Infrastructure Development, and IIDL Realtors with IFCI. Additionally, StockHolding Services, IFCI Financial Services, IFIN Commodities, and IFIN Credit will be consolidated into a single entity, which will become a direct subsidiary of the newly formed consolidated listed entity.

The government has decided to inject Rs 5 billion into the state-owned IFCI to enhance its financial stability ahead of the company's proposed restructuring and integration into a larger group. With this capital infusion, the government's stake in the company is expected to rise from the current 71.72 per cent as of September 2024. This capital infusion was approved through the passage of the first Supplementary Demand for Grants for 2024-25 in the Lok Sabha last week. The Supplementary Demand for Grants for 2024-25 allocated an additional Rs 4.99 billion for the 'Subscription to the Share Capital of Industrial Finance Corporation of India (IFCI)'. The Supplementary Demand for Grants also noted that considering savings of Rs 500.07 million in the same section of the grant, the remaining Rs 4.49 billion will be met from the surrender of savings in the capital section of Demand No.30-DEA, and this would not result in any additional cash outflow. Earlier in the year, IFCI had raised Rs 5 billion by issuing equity shares to the government. The Industrial Finance Corporation of India was established by the government on July 1, 1948, as the first Development Financial Institution in India. For the second quarter ending in September 2024, IFCI reported a loss of Rs 220 million, and for the first half of FY24, the company recorded a loss of Rs 1.70 billion. As part of its revival and restructuring, the Department of Financial Services (DFS), Ministry of Finance, approved in principle last month the 'Consolidation of IFCI Group,' which involves the merger or amalgamation of IFCI with StockHolding Corporation of India and other group companies. The proposed plan includes merging StockHolding Corporation of India, IFCI Factors, IFCI Infrastructure Development, and IIDL Realtors with IFCI. Additionally, StockHolding Services, IFCI Financial Services, IFIN Commodities, and IFIN Credit will be consolidated into a single entity, which will become a direct subsidiary of the newly formed consolidated listed entity.

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