Meet IFCI - A Financial Institution With 35% Bad Loans

Government-owned IFCI Ltd. has reported a gross non-performing asset ratio of 35 percent as of June 30. That’s higher than IDBI Bank’s 24 percent, the worst among listed banks in India.

IFCI’s gross NPA ratio stood at 32 percent as of March and 19 percent at the end of June last year, according to a statement on the long-term financier’s website. The company’s net NPA ratio at the end of the April-June quarter was at 29.9 percent compared with 27 percent in March. The number stood at 14.9 percent a year ago.

During the first quarter, IFCI saw loans worth Rs 838 crore slip into the NPA category. Net loss more than doubled year-on-year to Rs 276.9 crore. Provision coverage ratio as on June 30 stood at 43 percent, an increase of 100 basis points from March.

The company’s operational income fell to Rs 460 crore in the April-June quarter as compared with Rs 822 crore a year ago. It’s also lower than Rs 578 crore in the March quarter. More than 92 percent of income in the first quarter came from interest on loans and advances, the company said.

In a report last month, the Comptroller and Auditor General of India had questioned the credit appraisal mechanism of IFCI as more than half of the loans audited by CAG did not meet general lending policy.

Also Read: CAG Audit Finds Half Of IFCI Loans In Violation Of Norms

CAG reviewed 128 sanctioned loans and observed that in respect of 69 cases, the loans were sanctioned in deviation from the eligibility criteria stipulated in the general lending policy. The auditor suggested that the credit appraisal mechanism at IFCI requires to be strengthened.

The government owns 55.53 percent stake in IFCI as on June 30, according to the shareholding pattern available on the company’s website.