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Gupta panel moots Rs 36-billion package to revamp SFCs

The G P Gupta committee for revamping State Finance Corporations (SFCs) is believed to have suggested fresh infusion of funds to the tune of Rs 36 billion for reviving ailing corporations.

The committee, under IDBI chairman G P Gupta, which met in Delhi on Tuesday to finalise the report is said to have recommended an all time recap of Rs 36 billion considering significant erosion of the net worth of many SFCs over the years, official sources told PTI.

The recap amount is close to Rs 25-30 billion sought by the All India SFC Employees' Federation in its recommendation to the committee.

The Gupta committee report, which is expected to be submitted to the government later this week, would recommend restructuring of SFCs as it was felt that the state utilities were necessary for the states' industrial growth.

Though the committee has not pressed for mergers of SFCs, sources said it would be left to the respective states to decide on mergers of the financing corporations.

SFCs had earlier sought financial assistance jointly from IDBI and SIDBI, by converting their loans into equity as part of the recapitalisation.

There was also a proposal from SFCs to banks and financial institutes (FIs) for picking up stakes in the SFCs as part of the recapitalisation process.

About 50 per cent of total equity in the 18 SFCs have been eroded so far with a pile of non-performing assets (NPA) worth Rs 55.7 billion as on March 2000.

IDBI is the single major shareholder in the 18 SFCs present in the country and has so far invested Rs 4.26 billion in the corporations.

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