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Sitanshu Swain
Mumbai, August 4: Three term-lending institutions, IDBI, ICICI and IFCI, are set to join commercial banks to share the proceeds of the five-year India Resurgent Bonds (RIB), being launched by the State Bank of India on Wednesday.
Earlier, Infrastructural Development Finance Corporation (IDFC) had shown its interests in using some of the proceeds of the issue, which is expected to mop up around $4 billion. Ten foreign and four nationalised banks which have bagged the mandate to raise money overseas are allowed to swap 50 per cent of the proceeds with rupee funds.
IDBI chairman and managing director GP Gupta told The Financial Express that the institution would soon start negotiating with State Bank for availing itself of the proceeds of the five-year bond float.
"Lets see how much State Bank is able to raise. Then we will decide on how much we want," he said. The move is prompted by the fact that the costs of RIB funds will be cheaper than raising resources at market-related rates. "A whole set of Mumbai, August 4: Three term-lending institutions, IDBI, ICICI and IFCI, are set to join commercial banks to share the proceeds of the five-year India Resurgent Bonds (RIB), being launched by the State Bank of India on Wednesday.
Earlier, Infrastructural Development Finance Corporation (IDFC) had shown its interests in using some of the proceeds of the issue, which is expected to mop up around $4 billion. Ten foreign and four nationalised banks which have bagged the mandate to raise money overseas are allowed to swap 50 per cent of the proceeds with rupee funds.
IDBI chairman and managing director GP Gupta told The Financial Express that the institution would soon start negotiating with State Bank for availing itself of the proceeds of the five-year bond float.
"Lets see how much State Bank is able to raise. Then we will decide on how much we want," he said. The move is prompted by the fact that the costs of RIB funds will be cheaper than raising resources at market-related rates. "A whole set ofmodalities, like interest rates, period of lending, and so on, has to be worked out with the State Bank, Gupta said.
The State Bank has announced that participating banks can access rupee resources -- up to 50 per cent of the RIB proceeds raised by individual banks -- at a cost of 9.5 per cent. For banks, five-year money at a cost of 9.5 per cent works out cheaper, as three-year bank deposit costs around 11.5 per cent, excluding the SLR and CRR requirements.
Gupta hoped that funds would help in bringing down interests rates for infrastructure projects.
The IDBI chief held an inter-institutional meeting on Monday to discuss different avenues to find out alternative source of funding for power projects. "We will be able to settle the issue over the next two meetings," he said.
He said institutions would meet shortly to discuss the problems of those corporates that have undertaken infrastructure projects and are not able to achieve financial closures in the aftermath of the US sanctions. "We aredetermined to provide all support to such corporates. We will see that they are able to meet financial closures by month-end," he said.
With the impact of economic sanctions diluting fast, IDBI is all set to kick-start its external borrowing programme by the end of next month. The institution plans to borrow around $500-$800 million during the current fiscal.
"The situation is improving... The impact of sanctions is being diluted. I do not see any perceptible change in the country's outlook, following Moody's downgrading," Gupta said.
According to him, corporates are yet to decide whether to shift from forex to rupee resources. "We are yet to receive any proposal for conversion," he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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