Industrial Development Bank of India (IDBI) has sought the Reserve Bank of India's (RBI) permission to raise $250-$300 million overseas for its lending requirements. | |
| IDBI, which got converted into a bank in October 2004, cannot raise resources overseas as its legacy borrowings are in excess of the ceiling on external commercial borrowings (ECBs) by banks. |
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| IDBI had earlier petitioned RBI to agree to put aside its foreign currency borrowings till March 31, 2005 and not consider these borrowings under the ECB policy. |
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| IDBI wants overseas borrowings from April 1, 2005 onwards to be considered for adherence to the ECB policy. The central bank is still to take a view on IDBI's application, a IDBI source said. |
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| The bank's foreign currency borrowings are in excess of 60 per cent of its Tier I capital of about Rs 8,516 crore. |
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| The ECB policy restricts a bank's overseas borrowings to 25 per cent of its Tier I capital, which comprise paid-up equity, reserves and Tier-I bonds. |
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| Most of IDBI's foreign currency borrowings are on account of special packages for textile, cement and steel sectors. This includes $300 million raised through an Euro bond in March 2004 to take care of needs of companies in the steel sector. |
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| IDBI's argument is most of the its foreign currency resources are borrowings meant for specific purposes. These borrowings appear as pass-through on IDBI's books as the foreign currency risk is passed on to borrowers. |
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| The outstanding foreign currency loans extended by IDBI to Indian corporates aggregated Rs 4,413.10 crore as on September 30, 2004, down from Rs 5,676.90 crore as on March 31, 2003. |
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| IDBI's total outstanding borrowings "" both in rupee and foreign currency "" were nearly Rs 60,000 crore at the end of March 31, 2005. |
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