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Our Bureau

Mumbai, Aug. 21 ICICI Bank on Tuesday signed an agreement with Export-Import Bank of Korea for a line of credit of $200 million here.

ICICI Bank would use the funds to meet the foreign currency requirements of corporates having business connections with Korean companies.

These corporates could be Indian firms or those from neighbouring countries.

This is the first time that Korea Exim Bank has extended such a line of credit to any bank. This two-step loan is not specifically tied to any sector and can be used across any sector. Sectors that are likely to benefit from this line of credit include consumer durables, automobile, power and shipping.

Mr Chieon-Sik Yang, Chairman and President, Korea Exim Bank, said that Korean companies are increasingly investing in India. “This financial instrument will help Korean companies having business interest in India,” he said.

He said that while there is no limit on the amount Korea Exim Bank can lend, both banks had agreed that $200 million was suitable for the time being.

About ICICI Bank exploring similar arrangements with other countries, Mr K.V. Kamath, Managing Director and CEO, ICICI Bank, said, “In the past we have explored varieties of options with other countries. We will keep an open mind and explore options where there are trade flows between India and other countries.”

This facility would make it possible for ICICI Bank to give long-term loans, as it is a step-up loan having tenors of three years, 10 years and 14 years, said Ms Chanda Kochhar, Deputy Managing Director. The interest rates would be linked to tenors, she added.

The trade between India and Korea grew 40 per cent in the last two years, from $4.5 billion in 2004-05 to $6.3 billion in 2005-06, she pointed out.

ICICI Bank had signed a similar arrangement for $200 million line of credit with Japan Bank for International Corporation a year ago. Out of this, $155 million has been drawn, said an official from ICICI Bank.

More Stories on : Alliances & Joint Ventures | Credit Market | Private Banks | Foreign Banks | ICICI Bank Ltd

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