Mumbai, June 7: The Industrial Development Bank of India (IDBI) and Industrial Credit & Investment Corporation of India (ICICI) together have planned to raise $1,150 million through the external commercial borrowing (ECB) route in 1998-99.While the IDBI has sought the finance ministry's approval for a maximum $ 800 million via ECBs, ICICI has sought the permission for an amount of $350 million.Due to slack demand for foreign currency loans from domestic corporates, the Delhi-based Industrial Finance Corporation of India has not yet chalked out its plan for ECB programme in the current fiscal.``We will write to the ministry when we need the resources," IFCI chairman KD Agrawal told The Financial Express.Even though the IDBI and ICICI have sought to raise $1,150 million, the ministry may not give approval to their plans. In 1997-98, the finance ministry had allowed IDBI to raise $300 million, though the institution had sought approval for raising $600 million. Similarly, it has also pared theECB programme of the ICICI.``This year, the projection for ECB is based on the expectations of strong demand for foreign currency loans from Indian corporates during the second half,'' an IDBI source said. The institution expects a resurgence in industrial activities in 1998-99, he added.Despite a slump in the demand for foreign currency loan - witnessed in the middle of 1997-98 - the institution had recorded a 66 per cent spurt in its forex disbursements. It disbursed around Rs 3,000 crore of foreign currency loans during 1997-98.The IDBI had raised $200 million through the ECB route in the last fiscal even though the finance ministry allowed it to raise $300 million.ICICI had disbursed $ 753 million of foreign currency loans during 1997-98. ``The institution could disburse more than what it had raised during the year through recycling of funds,'' said ICICI's senior general manager Kalpana Morporia.ICICI has already drawn $260 million which it can make use during the current fiscal. Theinstitution has also had a $200 million line of credit from Export-Import Bank of Japan and another $50 million from Asian Development Bank of India.The finance ministry, while approving the ECB programmes, gives preference to the core sector projects, followed by the financial institutions and private corporates.IDBI modifies foreign-currency lending programmeIDBI has modified its foreign currency lending programme by introducing dollar denominated single currency pool (SCP) loan scheme.This was done as the demand for foreign currency loans from the institution has become market-driven and the existing back-to-back system of lending for foreign currency resources was not suiting the requirements of its clients, sources said.With the introduction of SCP, the old system of fixing interest rates and linking the repayment schedule to the maturity of a particular foreign currency resource has been discontinued. The interest rates under SCP depends entirely on the tenure of the loan and thecredit risk perception of the project.The repayment schedule for the loans under SCP has been delinked from IDBI's repayment schedule to its lenders. It is now based on the cash flow projections of project - as is the case with rupee loans - sources said. In 1997-98, IDBI had exercised its call option on the $100 million five- year floating rate notes due in 1999 and refinanced the same for the unexpired maturity of two years by way of a syndicated loan at a finer rate.
