Idbi Enhances Its Fd, Cd Borrowing Limit To Rs 6700 Cr

The Industrial Development Bank of India (IDBI) has enhanced the limit of funds it can raise through fixed deposits (FD) and certificates of deposits (CD) to Rs 6,700 crore from Rs 3,300 crore.

Besides, IDBI's Rs 500-crore bonds for raising short-term money for a period of between three months and six months has been accorded a PR1+ rating by the Credit Analysis & Research Ltd (CARE). This is for the first time that IDBI has approached it for a rating though it has used this route for raising resources in the past, too, said CARE officials.

The term money bonds will be issued at a discount to the market-related rates. Since the Reserve Bank (RBI) does not permit the financial institutions to issue certificates of deposits (CD) for less than one year, financial institutions opt for the term money bonds, said the CARE officials.

CARE has also enhanced the limit on the issue of fixed deposits or certificate of deposits from the existing Rs 3,300 crore to Rs 6,700 crore. Besides, it has retained the rating of 'AAA' assigned earlier to IDBI.

The decision by IDBI to opt for a rating and to enhance the limits came in the wake of the RBI move to remove the instrument-wise ceilings on the quantum of funds that can be raised.

Earlier, IDBI could raise Rs 500 crore by issue of term money bonds, Rs 800 crore by issue of fixed deposits and Rs 2,500 crore by issue of certificate of deposits. With the RBI removing the instrument-wise ceilings saying that the financial institutions can raise any amount subject to the fact that the aggregate amount raised does not exceed their net worth. IDBI's net worth stood at Rs 7,213 crore as of March 31, 1997.