Capital Infusion to Strengthen IFCI's Position

The government of India has made a decision to infuse Rs 500 crore into state-owned Industrial Finance Corporation of India (IFCI) to improve its financial health. This move comes ahead of the company's proposed restructuring and consolidation into a group. The government's holding in IFCI is expected to increase further from its existing 71.72% as of September 2024.

The capital infusion plan was approved through the passage of the first Supplementary Demand for Grants for 2024-25 in Lok Sabha last week. The Supplementary Demand for Grants allocated an additional amount of Rs 499.99 crore for 'Subscription to the Share Capital of Industrial Finance Corporation of India (IFCI). The remaining amount will be met from the surrender of savings available in the capital section, ensuring no additional cash outgo.

Earlier this year, IFCI had raised Rs 500 crore capital through the issuance of equity shares to the government. IFCI, established on July 1, 1948, was the first Development Financial Institution in the country. In the second quarter ended September 2024, IFCI booked a loss of Rs 22 crore, and in the first half of FY24, a loss of Rs 170 crore.

As part of the revival and restructuring, the Department of Financial Services (DFS) approved 'Consolidation of IFCI Group'. This entails the merger/amalgamation of IFCI Limited and StockHolding Corporation of India Limited and other group companies. The consolidation aims to streamline operations and enhance financial performance.