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Sitanshu Swain
Mumbai, June 22: The Industrial Development Bank of India (IDBI) has brought down its exposure to the recession-hit steel, textile and cement sectors in fiscal 1999. In a strategic shift, the term-lending institution has pushed up its exposure to sectors like petrochemicals, refineries and oil exploration, electronics, electricity generation, drugs and pharmaceuticals.
In the list of top 10 industry-wise outstandings during 1997-98, the institution has cut down its expoure in almost six segments.
The other segments, which have witnessed the decline in terms exposure of the institutions, are paper and paper products, man-made fibre, food products and basic industrial chemicals.
The institution has retained its exposure for the sugar industry at 2.3 per cent.
In case of iron and steel sector, IDBI's exposure came down from 13.7 per cent in 1997-98 to 13.2 per cent in 1998-99 though in absolute term it went up to Rs 6634.2 crore from Rs 5938.9 crore. IDBI's exposure to the textile sector also came downmarginally to 9.2 per cent from 9.4 per cent during the period.
The most dramatic shift was, however, seen in its exposure to the cement sector, which came down to 4.5 per cent from 6 per cent. In absolute terms also, IDBI loan outstandings to cement comapanies came down to Rs 227.7 crore in fiscal 1999 from Rs 2590.5 crore in fiscal 1998. For fertiliser industry the institution's exposure came down to 5.6 per cent from 5.9 per cent.
The institution has decided that while no further exposure will be extended to new projects in the vulnerable industrial sectors, fresh assistance will be directed to promising sectors thus further diversifying the portfolio. The bank has taken steps to monitor cashflows through proper mechanisms.
Specifically in the infrastructure sector, a three-tier security mechanism-letter of credit, escrow facility and government guarantee has been adopted. In the telecom, projects are awaiting financial closure as the telecom policy is under review.
Insight
In linewith expectations
Though in percentage terms IDBI's assistance to the iron and steel sector has come down, in absolute terms it has increased by 11.7 per cent to Rs 6634.2 crore from Rs 5938.9 crore. This, too, at a time when the industry is facing problems of overcapacity. A similar kind of scenario is faced in the petrochemicals sector where the institution has increased its exposure to Rs 2134.1 crore from Rs 1365.4 crore, a massive jump of 56 per cent. Exposure to industries that are doing well have shown a small growth rate. For example, the drugs and pharmaceuticals industry has seen a growth in assistance by 20 per cent to Rs 1587.6 crore from Rs 1325.6 crore. Seen in this context, it is no surprise that the institution's sub-standard and doubtful assets have increased 27 per cent to Rs 8230.3 crore from Rs 6456.2 crore.
Shishir Asthana
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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