Finance ministry cancels IFCI stake sale plan

NEW DELHI: The finance ministry has cancelled its stake sale plan in the state-owned IFCI after it asked Atul Rai to resign and appointed its own official as interim head of the financial institution that has been in the news for wrong reasons.

The government wants to improve the performance of the company before it divests stake in it. “It was felt that in the present situation, the government will not be able to fetch the correct price on its investment,” a senior finance ministry official privy to the development told ET.

The company’s scrip closed at Rs 25.50, down by 2.67% on Friday at the BSE, almost in line with the overall decline in the market indices. Ministry of Finance Joint Secretary Anurag Jain has taken over as the interim chief executive officer as part of the government's plan to resurrect the company that reported Rs 150-crore profit in January-March quarter, down 31.6% from the year-ago period.

The government had acquired a majority stake in the company last year after it converted its Rs 923 crore debt into equity, a proposal that had been opposed by Rai.

Government has a 55.57% stake in the company that was once on a par with the other two development institutions such as ICICI and IDBI, but has fallen by the way side in the last couple of decades. Both ICICI and IDBI converted themselves into banks, which IFCI could not manage and attempts to bring in private strategic partners has not gone anywhere.

Earlier this month, an argument between the chief credit officer and one of its VPs turned into a fist fight in the office. The finance ministry had sought details of the investigation and Rai’s resignation is seen as part of the government’s clean-up act.