Dhabol Power Project Can & #39;T Fail: Kamath

ICICI, which is among the major lenders to the Enron-promoted Dhabol power project, today shrugged off apprehensions over the completion of the project.

K V Kamath, managing director and chief executive officer, ICICI, said: "Dhabol is too big a project for it to be not completed."

Responding to shareholders' queries at the 46th annual general meeting of the financial institution (FI) here today, he said: "ICICI will get out of the debenture trusteeship business due to the Securities and Exchange Board of India guidelines on debenture trusteeship. ICICI has filed 78 cases in its capacity as a trustee where companies have not serviced the debentures."

ICICI has also decided to cut down its subsidiaries from the present 31 and to 21.

The FI will raise Rs 15,000 crore through the issue of Safety Bonds to meet its operational requirements in 2001-02. "The capital adequacy ratio is at 14.5 per cent and there is a lot of scope for leverage," he said.

ICICI will lend two-third of its funds to AAA and AA rated corporates, and the remaining to project finance for less risk-intensive projects.

On universal banking, Kamath said that ICICI is already acting as a universal bank. On the reverse merger with ICICI Bank, he said, "The issue needs to be discussed with the Reserve Bank of India. The company will follow the optimal route so that the impact of stamp duty and other taxes will be minimal."

Kamath added that ICICI is not going to continue with aggressive provisioning for this year. It had gone in for an accelerated provisioning of Rs 813 crore for fiscal 2001. "The one-time provisioning by ICICI led to the non-performing assets (NPA) being brought down to 5.2 per cent from seven per cent. The FI will henceforth resort to regular provisioning. We will try to maintain the NPA level below the five-per cent mark," said Kamath.

"NPAs are a generic problem for all banks and FIs. This is due to the fact that the Indian economy is undergoing restructuring," he said.