MUMBAI, MAR 17: The Industrial Development Bank of India (IDBI) has once again decided to postpone the meeting to consider a bailout package for steel companies. The IDBI board which was to meet on Thursday has decided to delay the package till March 23. This is the third time that the institution is deferring its bailout package which has now become a controversial political issue.While IDBI officials said non-availability of some directors for putting off the board meeting, other institutional sources said there are fears that if the loan package is approved at this juncture, the entire issue is likely to snowball into a major political controversy. ``The imposition of floor prices on some steel products has already become a controversial issue. We don't want to give the impression that we're being pressurised by industrial groups or lobbyists,'' said a source. The IDBI board will now meet in New Delhi on March 23 to consider the loan. The parliament session will also be over by this date.MohanGuruswamy, the former advisor of Finance minister Yashwant Sinha, had alleged that the decision to hike the floor price for steel imports had resulted in virtually giving away Rs 5,000 crore to the country's steel producers. He had also alleged that senior ministers were lobbying on behalf of various industrial groups. Several members of the Parliament had asked for a probe into these allegations.He had also accused the Mittals of Ispat Industries of being favoured by Union minister Pramod Mahajan. The Jindal Vijayanagar Steel project belonging to the OP Jindal group has gained importance as OP Jindal represents the Haryana Vikas Party (an ally of the BJP). Yashwant Sinha, on the other hand, had said Guruswamy was lobbying for the Essar group.``Steel companies which have asked for loans know that FIs are not in a position to back out at this stage. They have already sunk in crores of rupees. The interest burden on this loan is mounting as these projects are yet to be completed. Many of them are also onthe verge of defaulting on their previous commitments,'' said a banker.The committee of directors set up by the IDBI board has recommended four companies (Ispat Industries, Ispat Metallics, Essar Steel and Jindal Vijayanagar Steel) for fresh loans. The applications of 10 other steel projects were rejected by this group earlier this month. As per the proposal, IDBI and other institutions (ICICI and IFCI) are supposed to pump in nearly Rs 1,000 crore to these unfinished projects.However, ICICI and IFCI are not said to be very keen to go for funding unviable steel projects in a big way. ``If ICICI and IFCI back out on their commitments, IDBI will be forced to chip in with the balance amount. With the steel continuing in doldrums, there is uncertainty over repayment of principal and interest. Institutions are already saddled with too many loan reschedulements and roll-overs,'' sources said.Meanwhile, IDBI and other institutions have tightened monitoring of end-use of funds following allegations thatmoney is being diverted for other purposes. IDBI has also asked promoters to bring in matching funds along with institutional loans. It is also working out a strategy to convert the loans of some steel companies into deep discount bonds or debentures.
