The investment is being made in two tranches -- one, in the form of subordinated debt of $5 million raised at 280 basis points over the London Inter Bank Offered Rate (Libor) and another through a convertible loan of $5 million that has been raised at 138 basis points over Libor.

"The amount raised is for on-lending to Indian private companies involved in trade and finance projects that promote export-oriented enterprises," GTB chairman Ramesh Gelli told reporters in Mumbai on Thursday after signing an agreement with IFC.According to him, the capital adequacy is likely to hover around 12 per cent after the infusion of $10 million. Gelli added that with this loan from IFC, GTB has become the first bank inIndia to raise a convertible loan. The director of IFC's Asia II department, Rashad Kaldany, said the convertible option is exercisable 18 months from now at the rate of Rs 60 per share. "It will be at any price but preferably not below Rs 25," Kaldany said. Gelli said if IFC chooses to exercise the option to convert the $5-million loan into equity, the multilateral agency's equity stake is likely to be around 12 per cent.