Besides, the institutions have also decided to carry out a fresh viability study of the steel projects.

They are also insisting that banks should continue to meet the working capital requirements of the projects while institutions draw up a plan to inject fresh funds into the industry.

Financial institutions' chiefs met in Mumbai on Saturday to chalk out a new mechanism to ensure fresh advances to the steel sector.

Speaking to The Financial Express, Industrial Development Bank of India (IDBI) chairman GP Gupta said: "We are working on new strategy. We will meet again in mid-October to take a final view on the steel sector."

The Saturday meeting -- chaired by IDBI chairman GP Gupta -- was attended by ICICI chief KV Kamath, UTI chairman PS Subramanyam, IFCI chief PV Narasimham and GIC chairman D Sengupta.Among the top institutional chiefs, LIC chairman G Krishnamurthy was not present at the meeting.

According to Gupta, banks should continue to advance term loans to the steel sector and ensure the flow of working capital loans.

"We will discuss the issue with bankers. Both the Indian as well as foreign banks should continue to support the industry as they have been doing," Gupta said.

On fresh promoters' contributions the IDBI chief said: "We are not in favour of changing the debt-equity ratio... However, wherever there is a cost overrun, the promoters must share at least 20 per cent of the burden."According to institutional sources, while investment institutions like LIC, GIC and UTI were not keen on paring their exposure in the steel sector, term-lending institutions led by IDBI wanted to curtail their exposure and put a cap on fresh exposures in the steel industry as the quality of assets has left a mark on their balance sheets.

"The term-lending institutions are strongly opposing the idea oftaking fresh exposure in the steel sector. We will work out some mechanism to overcome the crisis," sources said.

The institutions are planning to work out a similar package for the textiles industry. "The issue will be discussed in detail at the next meeting," sources said.

The total institutional exposure in the private sector steel sector is estimated to be over Rs 20,000 crore, forcing the institutions to call an emergency meeting to discuss a bailout package for the beleaguered steel industry.

The institutions may move the finance ministry seeking duty relief to the steel companies in the present context. "All we want is some sort of a comfort which will encourage us to take fresh exposures in steel industry," sources said.