IIBI Winds up


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

 In a move towards winding up of Industrial Investment Bank of India (IIBI), its board in January 2008 decided to sell the entire loan book at one go. The directors on the IIBI board cleared the proposal to auction both the good and the bad assets of IIBI for cash in the past week. The company has also decided to appoint Deloitte & Touche to sell the loan book.

The government-owned IIBI started working towards winding its business way back in 2005 after the Industrial Development Bank of India rejected a government proposal to merge the Kolkata-based institution with itself.
High level of bad loans and poor capital was one of the key reasons why the government decided to close it down. As per RBI data, IIBI's capital adequacy ratio (CAR) was negative at 64%, while its bad loans stood at 13% for March 2006. It had a loan book of Rs 1,006 crore with Rs 874 crore of standard assets. The balance Rs 132 crore were sub-standard and doubtful assets as on March 2006. RBI indicated that IIBI is in the process of voluntary winding up.
History of IIBI
The Industrial Investment Bank of India was a 100% government of India-owned financial investment institution. It was established in 1971 by resolution of the Parliament of India . The bank was headquartered at Kolkata.
 
The Industrial Reconstruction Corporation of India Ltd. was set up in 1971 for rehabilitation of sick industrial companies, was reconstituted as Industrial Reconstruction Bank of India in 1985 under the IRBI Act, 1984. With a view to converting the institution into a full-fledged development financial institution, IRBI was incorporated under the Companies Act 1956, as Industrial Investment Bank of India Ltd. (IIBI) in March 1997. IIBI offered a wide range of products and services, including term loan assistance for project finance, short duration non-project asset-backed financing, working capital/other short-term loans to companies, equity subscription, asset credit, equipment finance and investments in capital market and money market instruments.

In 2005, a merger of IIBI, IDBI and IFCI was considered, but IDBI refused and it was decided in 2006-2007 to close the bank. Deloitte and Touche was appointed to dispose of IIBI's Non-Performing assets.


Tuesday, 05th Apr 2016, 07:27:42 AM

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