Shares of IFCI Ltd fell 2.87% to ₹62.70 as of 10:42 AM after Reuters reported, citing government sources, that the Indian government is planning to shut down the non-banking financial institution’s lending operations due to capital constraints. Instead, IFCI will transition into an infrastructure advisory firm.
According to the report, IFCI, launched in 1949, was asked to cease fresh lending during the 2021-22 financial year after a significant rise in bad loans depleted its capital and liquidity. The Indian government currently owns nearly 72% of the company.
Sources told Reuters that IFCI’s new role will include providing infrastructure advisory services, particularly project evaluation for state governments in areas like infrastructure and green projects. This move aims to align IFCI with the advisory model of SBI Capital Markets, the investment banking arm of the State Bank of India.
Additionally, the government plans to infuse ₹5 billion into IFCI this year to ensure the company avoids defaults on repayment obligations. Further capital injections will be considered only for this purpose, according to the sources.
This revamp comes as India ramps up investments in infrastructure, with spending tripling over the past five years to ₹11.11 trillion ($131.89 billion) for the 2024-25 fiscal year. Neither IFCI nor the federal finance ministry has commented on the report.
