Financial Daily from THE HINDU group of publications
Saturday, Jan 28, 2006
Financial Daily from THE HINDU group of publications Saturday, Jan 28, 2006 |
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Money & Banking
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RBI & Other Central Banks IFC keen to boost rupee lending C. Shivkumar
Bangalore , Jan. 27 INTERNATIONAL Finance Corporation (IFC), the World Bank's private sector lending arm, wants to enhance its rupee lending to domestic corporates in the country. The funding offer is aimed more at the middle-rung corporates, where IFC has traditionally preferred to pick up equity stakes or quasi equity stakes in the form of preference shares with or without convertible options. IFC, in the past, has been involved in foreign currency loan syndications with some of the large private sector corporates.. However, with demand switching from foreign currency to local currency loans, IFC wants to take part in the rupee lending. IFC's Chief Investment Officer for South Asia, Ms Anitha Marangoly George, said, "We have received several enquiries for local currency funding." IFC is not the only multilateral institution wanting to lend rupee funds. Another multilateral institution, the Asian Development Bank, had raised funds through issuance of bonds in the country for precisely this purpose. In 2004, the ADB had raised about Rs 4,500 crore through rupee-denominated bonds. This year againn the bank is expected to raise another $400 million through local currency borrowings for onlending in rupees. IFC has, so far, not floated any bonds in the domestic market for meeting the rupee funding requirements, Ms George said. It has not ruled out this option in future, she added. Most of IFC's local currency funding requirements are met through swap arrangements. This implies that the IFC enters into a long-term swap arrangement with a local bank or financial institution for release of matching rupee funds. In fact, Powerlinks Transmission Company Ltd, which is implementing the Delhi Tala Transmission Line, has already taken advantage of IFC offer. The reasons for the preference for local currency loans from multilateral institutions are the long tenures and customised structures. This includes providing guarantees to local currency bond issuers. This is unlike banks, which offer straightjacket structures.
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