The government on Friday announced a Rs 5,220 crore (Rs 52.20 billion) financial support -- of which Rs 2,096 crore (Rs 20.96 billion) has already been provided -- for the ailing Industrial Finance Corporation of India over a period of 10 years for meeting principal and interest liabilities.

"As per the restructuring package, government proposes to give financial support of Rs 5,220 crore to IFCI spread over till 2011-12 for meeting the principal and interest liabilities," Minister of State for Finance Anandrao Adsul informed the Lok Sabha.

"The government would service the borrowings of IFCI from ADB and KfW," he said, adding liabilities of IFCI in respect of government guaranteed SLR bonds and retail borrowings of investors below Rs 100,000 would be taken over by the Centre.

The Centre would also bear the difference between the existing coupon rate and current G-sec rate on SLR bonds held by PSUs and FIs till maturity.

Out of the total Rs 5,220 crore package, Adsul said, "A sum of Rs 523 crore (Rs 5.23 billion) has been released as loan during 2003-03 and another sum of Rs 1,573 crore (Rs 15.73 billion) as grant has been released during 2003-04 to IFCI."

IFCI reduced its losses to Rs 259.70 crore (Rs 2.60 billion) last fiscal from Rs 884.70 crore (Rs 8.85 billion) in 2001-02 and Rs 261.93 crore (Rs 2.62 billion) in 2000-01.

As part of efforts to reduce the losses further, Adsul said the government has asked the ailing FI to reduce non-performing assets to 9 per cent by 2004-05 from the present 22 per cent by transferring the bad loans to its Asset Reconstruction Company within the next three years.