IFCI may get fresh funds; reverse merger in works

Lender has struggled despite capital injections; 500 cr infusion likely in FY25

- Subhash Narayan

The government may infuse additional capital into IFCI Ltd and reverse-merge it with one of its subsidiaries, two people aware of the matter said, as part of a rescue plan for India's oldest development finance institution where losses have mounted over the years.

Although the reverse merger option is still being worked out, IFCI may most likely be merged with its subsidiary Stock Holding Corporation of India (SHCIL), the people cited above said on the condition of anonymity. SHCIL is among the country's largest depository participants, the largest premier custodian in terms of assets under custody, and the highest profit-generating entity under IFCI's fold.

IFCI owns prime real estate and holds significant stakes in several entities, including SHCIL and IFCI Financial Services Ltd (IFIN).

However, it has done little lending business in the last two decades, and halted lending operations altogether in FY22 following liquidity constraints. It has reported annual losses for at least five years till FY23.

Queries sent to IFCI and the finance ministry on the reverse merger plans remained unanswered.