IDBI gets Centre's nod for $300m ECB

The Industrial Development Bank of India's (IDBI) plan to raise $300 million abroad has received the government's nod.

According to official sources, the borrowing will be of five-year tenure and the funds raised under this programme would be used to restructure steel companies to which IDBI had earlier lent to.

The original proposal entailed a foreign currency worth $500 million but took time to get approved as ECB policy was tightened to curb forex inflows.

However, the borrowing programme of IDBI was cleared in principle as the modified policy exempted loans taken for restructuring steel sector and in meeting funding requirements of infrastructure.

Four major steel companies including Jindal Steel, Essar Steel and Ispat are expected to get relief under the IDBI foreign currency borrowing scheme.

Even though these firms are eligible for raising foreign currency loans on their own, the new ECB guidelines restricting banks and financial institutions to furnish guarantees to their respective borrowing programmes imposed a major hurdle.

While Ispat and Jisco were planning ECB of $ 225 million each, Essar had proposed an issue of $200 million.