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Thursday, Mar 11, 2004

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IDBI mulls $500-m ECB for textile units' package

Poornima Mohandas

Mumbai , March 10

INDUSTRIAL Development Bank of India is considering another $500 million external commercial borrowing for funding the textile-restructuring package. The development financial institution had raised $300 million just last month for the steel-restructuring package.

"We plan to raise 5-year bonds worth $500 million through the ECB window. We may do so perhaps only in the new fiscal on the back of our 2003-04 results. Besides we need to give the market some time before we approach it with another issue,'' said a senior IDBI official.

"Now that the limit under the automatic route (i.e., requires no prior approval from the RBI) has been lifted to $500 million we may not need permission from the Government either. But the proposal is still in the preliminary stage. We are yet to identify the textile units to be restructured.''

Earlier in November 2003, IDBI had applied for a $500 million ECB for the steel restructuring package, but this borrowing was downsized to $300 million by the Finance Ministry.

As part of the Government's textile restructuring package, banks/FIs have been allowed to raise 5-year ECB to the extent, to which they will restructure loans.

The package for textile units involves reduction of interest rates on outstanding loans of over Rs 10,000 crore. It is envisaged to benefit hundreds of textile units, by bringing down the interest rates on term loans to 8-9 per cent from the current 12-13 per cent. The institutions will further examine the units through a `techno economic viability' test before offering the package.

More Stories on : Overseas Borrowings | Textiles | Financial Institutions

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