The government will ensure easier access to bank credit, unshackle internet services and enable overseas acquisitions of software companies as part of sweeping policy changes for the information technology sector, to be announced within the next fortnight.
These decisions have been gazetted by the government, with some of them being deadlined for August 15. This forms part of the government's agenda, first spelt out by finance minister Yashwant Sinha in his intervention in the budget debate in the Lok Sabha, to boost the infotech segment.
The financial package to be announced before August 15 by the Reserve Bank of India includes treatment of lending to the IT sector as priority sector lending (to be monitored by the finance ministry) for the next five years and allowing concessional refinance to commercial banks. Similarly, new criteria based on turnover for working capital for the IT sector would be announced by the RBI. Banks will also be advised to give 25 per cent of the contract value for 18 months, with the first six months as term loan (without collaterals) and from the 7th month onwards annualised cash flow statments shall be accepted instead of collaterals.
Further, commercial banks would be allowed to invest in dedicate venture capital funds. This would be forked out from the currently permitted corpus of 5 per cent of the incremental deposits of the previous year. ICICI, IDBI, UTI and SBI will form joint ventures with Indian or foreign companies to form dedicated venture capital funds with an individual corpus of Rs 50 crore.
