European Investment Bank (EIB), the world’s largest multilateral financial institution, is close to extending a euro 50 million credit line to Rabo India Finance to finance Indian projects with European interests.

EIB’s senior loan officer for Asia Philippe Szymczak told reporters today that the institution has also initiated talks with other Indian banks and institution to lend further to Indian companies. Szymczak said that loans upto Euro 15 million will be handled by Indian banks while larger accounts would be dealt directly by EIB.

“We intend to step up our activity in India as the economic environment has improved, the economy is offering at a good rate, foreign direct investment restrictions have been eased and its inflow, particularly from the European Union, is increasing,” Szymczak said.

Szymczak, who had meetings with reserve bank and finance ministry officials early this week, said though EIB’s lending volume was Euro 40 billion in 2002, almost four times that of the World Bank, it had very little exposure in this part of the world.

The European Union’s financial institution has given only 27 loans in entire Asia valued at Euro 1.1 billion, of which there was only one loan of Euro 55 million given to Powergrid Corporation in 1993, he said.

He said EIB was negotiating with some Indian banks for supporting the investments in the infrastructure and agricultural sectors as also the social sector like water management, sanitation and environment projects.

Szymczak further said that privatisation also offered good investment possibility for European companies as had happened in case of Latin American countries.

He added that EIB was one the cheapest source for raising debt by Indian companies.

He said that the multilateral institution gives out both variable cost and fixed rate loans with the former offered at interest rates as low as 1.5 per cent while the fixed cost loans come with an interest rate of about 4.7 per cent.