``We are planning to start lending to NBFCs again. The proposal has already received initial approvals and is expected to be launched by next week,'' senior IDBI officials told PTI here today.

The financial institution (FI) had stopped funding NBFCs way back in 1994, when it had felt that ``things were not going too well with them.''

IDBI is aiming to reach the medium and small size customers, via the NBFCs. Though the FI has decided not to enter into retail financing in the near future, funding of NBFCs will in effect act as a `channel' providing access to a semi-retail and retail customer base.

``The funding would be done under certain guidelines. Only those NBFCs who have good credit records and good ratings would be given loans,'' the officials said.

The NBFC seeking IDBI funds would require a minimum rating of `AA', they saidadding 60 per cent of its income has to be from leasing and hire purchasing.

IDBI has set a ceiling of Rs 30 to 40 crore for providing loans to NBFCs. The move on the part of the FI comes when banks, who have been permitted by the Reserve Bank of India (RBI) to lend to NBFCs, are hesitant to do so, quoting high credit risk as the reason.

``The situation has improved a lot with NBFCs. Further, we are adhering to strict risk-mitigating rules which would render the lending safe,'' IDBI officials said.

The FI, however, would not set apart a pre-specified quantum of funds to be given to the NBFCs. ``We will meet the requirements as and when the needs arise,'' they added.

The institution is also planning to provide financial assistance to multinational companies and other overseas investors for merger and acquisition (M&A) activities in the country, according to the officials.

IDBI has embarked upon these new initiatives to develop better deployment opportunities for its funds, they said. Theinstitution's sanctions had dropped by 15.8 per cent during the first quarter of the current fiscal compared to the same period last year, whereas the disbursements decreased by 30.6 per cent.