ICICI signs $200 mn credit line

ICICI Bank, the largest private sector bank in the country, has signed a $200 million line of credit with Korean Eximbank to support Korean companies operating globally. ICICI Bank's Hong Kong branch will avail this credit facility.

"This line of credit is for foreign currency financing. Under the arrangement, Korean Eximbank will lend to ICICI Bank and in turn ICICI Bank will lend to companies. This line of credit will benefit companies in the automobile, auto ancillaries, power, transportation, plastic and consumer electronics. The interest rate on the credit line is linked to the tenure. It is a step-up rate structure for loans availed for three years, 10 years and 14 years. The interest rate is linked to Libor,'' said Chanda Kochhar, deputy managing director, ICICI Bank.

The credit line will also be utilised by ICICI Bank to finance the foreign currency requirements of Indian corporates having equity participation by Korean companies or having relationship with Korean companies.

"Corporates availing credit under this window will have the advantage of tenure and interest rate. The pricing of the loan will be linked to the credit rating of the company,'' said Sudhir Dole, senior general manager, global head, international financial institutions group, ICICI Bank.

"During the last few years we have seen Korean companies investing heavily in India and this trend is expected to continue. Hence Korean Eximbank decided to tie up with ICICI Bank. Currently, we have sanctioned a credit line of $200 million. We are open to increasing the credit line once this portion is utilised,'' said Cheon-Sik Yang, chairman and president, The Export-Import Bank of Korea.

In the past, ICICI Bank has also tied up with Japan Bank for International Co-operation (JABIC) for a credit line of $200 million. Companies have so far drawn about $150 million under this window.

Commenting on the impact of the recent credit crisis in the US on the corporates' overseas borrowing costs, Kochhar said, "The interest cost has increased in certain cases in the last one month. There is no change in interest rates in cases where negotiations were close to conclusion.

In some cases, the increase is up to 150 basis points."