Icici Needs Rs 6000 Cr For Core Loans

The Industrial Credit & Investment Corporation of India (ICICI) is expecting a fund requirement of around Rs 6,000 crore for financing the infrastructure sector in the coming financial year, which is almost double the requirement during the current year.

The infrastructure sector has a tremendous growth potential. a senior ICICI official told Business Standard. During the current financial year, the financial institution (FI) have notched a Rs 15,000-crore incremental growth. Around 45 per cent of this amount has been attributed to the infrastructure sector (including oil and gas).

Around 30 per cent of the growth has been credited to structuring deals and enhancing credit quality through various attractive instruments.

In fact, this has helped us lure away more customers from other outfits, said the official.

The rest of the amount has been attributed to traditional industrial project financing. The FI is expecting to notch a 20 per cent growth in turnover in the current financial year, which will be five per centage points lesser than the growth made in the last financial year. According to sources, this downswing is owing to the general industrial slowdown in the economy. Meanwhile, ICICI is coming up with a public issue offering under the name safety bonds, which is slated to hit the market on March 16.

The issue is in the nature of unsecured redeemable debentures aggregating Rs 400 crore with a right to retain oversubscription up to Rs 400 crore.

On offer are three kinds of bonds: tax saving, regular income and the money multiplier bond.

By investing in ICICI's tax saving bond investors can either choose to save tax under Section 88 or save tax on capital gains under Section 54EA or Section 54EB of the Income Tax Act.

Full and firm allotment is assured for all valid applicants of the tax saving bond. The bond has three options and under the second one, tax treatment would be as that for a deep discount bond.

The FI proposes to facilitate market making by offering two-way quotes for select bonds as it has done for its April 1997 issue and is about to commence for its December 1997 issue.

This would ensure that small investors would have guaranteed exit option in case they wish to sell the bonds.

The institution has also decided not to have any premature recall option for these bonds, thereby committing a fixed tenure and interest rate to investors.