IFCI CEO Atul Kumar Rai quits following pressure from the government

New Delhi: Atul Kumar Rai, the CEO and Managing Director of state-owned financial institution IFCI, has been forced to quit just days after his close associate and former CAG Vinod Rai demitted office. Atul Rai put in his papers on Thursday reportedly following pressure from the government.

Officials in the Finance Ministry have been hinting that Rai would be asked to step down as soon as Vinod Rai left office. The Finance Ministry first opened the issue with Atul Rai's appointment around two years ago, when the CAG started turning the heat on the government. Subsequently, the government had taken over a major stake in IFCI by converting its debt into equity.

He joined IFCI in July 2007 after his predecessor RM Malla was elevated as Chairman and Managing Director of SIDBI. Before joining IFCI, Rai, an IES officer, worked for over 20 years in various positions in the Government of India (GoI). He was re-appointed by the Board in June, 2012 for a period of five years. However, sources said the government was not happy with his performance. Rai could not be reached for his comments on the development.

In October 2012, the government's stake in the company rose to 55.57 per cent following the conversion of debentures worth Rs 923 crore that it held in IFCI into equity. Following the restructuring of shareholding, the government appointed two directors on the board.

Since 2001, the government had been giving funds to IFCI to help it tide over financial problems. It initially gave Rs 400 crore in the form of 20-year OCDs. In 2002-03, as part of the financial restructuring package of Rs 5,220 crore, the government gave IFCI Rs 523 crore as loan in the form of OCDs. However, the government stopped releasing funds after IFCI started making profits.

The decision to go ahead with the conversion of OCDs into equity was taken by the Committee of Secretaries and the government had also taken exemption from Sebi for application of the takeover code. Shares of the IFCI closed at Rs 26.20 per unit, down 2.24 per cent on the BSE.

(With additional information from PTI)