However, its non-performing assets (NPAs) to loans ratio increased by 1.3 percentage points to 14 per cent. In absolute terms, net NPA increased by 56 per cent to around Rs 470 crore during 1998-99 from Rs 302 crore as on March 31, 1998. IIBI provided Rs 14.69 crore on account of its NPA in 1998-99 as against Rs 6.07 crore in the previous fiscal.

IIBI chairman & managing director G Goswami noted that "extreme competitive market conditions caused a strain on financial institutions." In addition to this, many of its clients defaulted in repayments owing to severe liquidity crunch.

The institution maintained last year's dividend payout of 10 per cent.

IIBI's aggregate sanctions went upmarginally by six per cent to Rs 2175 crore in 1998-99 as against Rs 2061 crore in the previous fiscal. Goswami said that owing to a dearth of large projects in the past financial year, funds could not be sanctioned.

Disbursements increased by 46 per cent to Rs 1688 crore from Rs 1153 crore in the previous fiscal. According to Goswami, most of the increase in disbursements were due to sanctions in 1997-98.

Operating profit increased by 19 per cent to Rs 102.47 crore from Rs 86 crore in 1997-98. This has been achieved by containing expenses within Rs 97 crore.

According to an IIBI press release, the institution augmented its asset base by about 44 per cent to Rs 3421 crore in 1998-99 from Rs 2375 crore in the previous year.

Its networth increased by 49 per cent to Rs 608.87 crore from Rs 409.42 crore in the previous fiscal. Officials said that this was partly due to ploughing back of retained profits of around Rs 125 crore in the last two years and partly due to mobilisation of Rs 150 crore through anSLR bonds issue, which was oversubscribed.

IIBI mobilised Rs 1190 crore through issue of unsecured debt instruments such as the SLR Bonds. Total mobilisation through unsecured debt was to the tune of Rs 1779.32 crore in 1998-99 as against Rs 828.47 crore in the previous fiscal. The authorised capital for preference shares was enhanced to Rs 500 crore from Rs 250 crore. Officials said that out of this around Rs 213.27 crore was mobilised during the year.

According to Goswami, enhancement of authorised capital was necessary since under the norms, its loans were being linked to the amount of net-owned funds. With a net-owned fund base of Rs 174 crore, it could advance a maximum of Rs 43 crore to an individual company and a maximum of Rs 87 crore to groups.

With enhancement of authorised capital, the ceiling for loans to individual companies stand at Rs 140 crore and for groups at Rs 280 crore.

In a bid to sustain and augment its profitability, IIBI retired high-cost debt funds of around Rs 75 crorecarrying an annual interest tag of 15.5 per cent. It was prematurely redeemed through exercise of call option, while another Rs 113 crore having an annual interest component of 16.9 per cent was repaid on April 1, 1999.

IIBI will also focus on providing short-term financial assistance to bluechip companies and on non-fund based activities, in addition to assistance in long-term projects. It plans to revamp its merchant banking operations also.