New Delhi, Aug 08: The government has sought to clean up the balance sheet of IFCI prior to its planned restructuring by converting a loan of Rs 1,573 crore provided to the institution into a grant. Besides, Rs 607 crore has been provided as loans to state governments to settle cane farmers’ dues for 2002-03.

The move, effectively a write-off of the loan, has been resorted to as the loss ridden IFCI is not in a position to service this liability. Consequently, the government, which had provided for this loan in budget 2002-03, has decided to convert this into a grant and strengthen its balance sheet. This is reflected in the first batch of supplementary demand for grants tabled in Parliament today.
The conversion of the loan into a grant will not however entail any immediate cash outgo, according to the government. The financial institution’s balance sheet will sport a better look, given the reduction of its liabilities.
The government is planning to firm up the IFCI restructuring package after the Cabinet approves a package for IDBI.