In 2004, the presence of significant Non-Performing Assets (NPAs) and recording of dramatic losses have brought the Industrial Finance Corporation of India (IFCI) very near to the collapse and the available cash is not enough to run the business. The institution followed every possible option to sustain its business and continue operations by renting out and selling off its operation buildings. It has declined the morale of employees. The operations of the institute are no longer viable and become unsustainable. In this scenario, the board of directors at IFCI and India’s government are in a confusion about the future plans of IFCI. The only option the board of directors and the government chose, after the complete evaluation of available alternatives, is to restructure IFCI. This reform that launches the state financial institution on the development path includes numerous approaches like converting debt into equity, introducing provisions for bad loans, restructuring liabilities, retiring high-cost loan, removing NPAs effectively, intentionally retiring staff, supporting the short-term projects, following a selective approach in determining projects in order to better assist and monitor those projects. The crucial part of this reform that could ensure its success is an effective leadership who could transform the public sector culture into a new work culture and could incorporate ethics to the institution. Consequently, this transformation increases the employee morale as well.
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