IDBI to raise Rs 6,000 crore

In order to create a secondary market in bonds, the institution is talking to some parties within the country for market making, IDBI chairman and managing director, GP Gupta told reporters today while launching the first flexibond issue of this fiscal.

Having suffered through its exposure to the steel sector, Gupta said they did not intend to take further exposures in greenfield steel ventures. Incidentally, IDBI along with other institution is waiting for the steel companies to comply with certain stipulations before further disbursements can take place.

Only two companies – Jindal Steel and JK Steel Corporation – have so far fulfilledthe requirements. IDBI executive director TM Nagarajan said that they had already started disbursements to the companies.

On the issue of Essar Steel and its $250 million floating rate note (FRN), Gupta said they had given the company ample time in which to request the bond holders for a roll-over and iterated the stand taken by the financial institutions that they would not finance any corporate’s liabilities.

Gupta said IDBI was expecting its sanctions and disbursements to grow by 10 to 12 per cent during the year. The bank would declare its first quarter results for the year on July 30.

In the current year, the bank was not planning to access any foreign currency funds as last year a large part of its foreign currency denominated funds were unutilised due to lack of demand from the corporate sector, he said.

The bank is also looking at going in for interest rate swaps on rupee finances and forward rate agreements.

Nagarajan said that cross border financing was being looked at closely as a meansof funds utilisation but said that a lot of technicalities had to be ironed out first.

While the buoyant trend in the economy – particularly steel, cement and textiles – is expected to reduce the institutions non-performing assets, Gupta said they had formed a special committee which would be closely monitoring companies in which it has substantial exposures.

Gupta ruled out the necessity for his institution having to raise capital through Global Depository Receipts or American Depository Receipts on the lines of those announced by ICICI Ltd saying that their capital adequacy was better than that of ICICI, whose capital mainly consisted of tier-II capital.

The bank would maintain its focus on infrastructure lending for the current year too with particular focus on info tech, agro and food processing and pharma, Gupta said.