Financial institution Industrial Development Bank of India's (IDBI) net borrowing has for the first time turned negative, with payments overshooting fresh fund accretion by Rs 23 crore in the first quarter of the current fiscal.
On account of an increased repayment and prepayment of past borrowings, IDBI's total borrowing shot up to Rs 2,991.30 crore during the first quarter of the current financial year, a rise of 38.2 per cent over Rs 2,165.1 crore during April-June 2000.
During April-June this year, the FI's repayments and prepayments amounted to Rs 3,014.3 crore. In the first quarter of the last fiscal, borrowings were Rs 877 crore higher than the repayments.
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The FI is moving in a path similar to another institution, IFCI Ltd - where IDBI is the largest stakeholder - where 70 per cent of the borrowings were used to meet its interest and other payment obligations over the last few years.
Another cause for concern for the institution, which has sought a bail out package from the government, is that the decrease in cost of borrowings is slower than the decline in yield on investments due to stiffer competition.
During the first quarter of 2001-02, the cost of rupee borrowings was marginally higher at 10.35 per cent compared to 10.34 per cent a year ago. The institution, however, is of the opinion that the average cost has moved in tune with changes in market interest rates. Cost of rupee borrowings moved up during 198-99 and 1999-200 but came down during the last fiscal.
The total borrowing cost, including foreign currency debt, has been moving southwards from 11.88 per cent in 1996-97 to 11.78 per cent in 2000-01.
Last fiscal, IDBI mobilised Rs 33,600 crore with internal generation accounting for Rs 10,500 crore. The FI's rupee and foreign currency borrowings amounted to Rs 8,800 crore.
The incremental cost of rupee loans declined by over 90 basis points to 11.21 per cent in 2000-01. IDBI retired a large part of its high cost borrowings amounting to about Rs 3,900 crore in the last financial year, which resulted in a cost reduction of about Rs 150 crore.