Top institutional sources told The Financial Express that FIs are likely to advance more funds to most steel companies to see to it that the projects are implemented well.

This has been decided keeping in mind the recession that the steel industry currently faces, sources said. However, the proposals would be taken up on a case-by-case basis, they added.

Significantly, FIs have an exposure of over Rs 20,000 crore in the steel sector. The proposals pending with the institutions include those of Essar Steel, Malvika Steel and Ispat Metallic.

Earlier, there was a lack of consensus among FIs about advancing fresh funds to companies in the sector. FIs also urged the ministry for some relief to the steel sector in the form of lower excise duty in the next budget.

Meanwhile, the institutions have framed 10 conditionsfor the steel companies seeking some concessions from FIs.

The conditions include pledging of equity by promoters with FIs which can be encashed in case of default.

Further, the institutions want a condition envisaging conversion of all additional loans into equity at par whenever they desire. The other conditionalities specified by them include pre-payment of additional loans in case of improvement in cash flows and creation of trust in which revenues generated by the companies can be deposited and used for clearing institutional dues.

FIs also want companies to allow audit of their firms by the auditors to be appointed by FIs as well as concurrent audit of their finances, and the promoters to bear at least 20 per cent of the cost in case of cost overrun.

Institutions had also demanded imposition of anti-dumping duty on hot-rolled steel.