Sidbi Concerned Over Decline In Concessional Funds

"Over the years, we are getting less advances from the government, the Reserve Bank, Industrial Development Bank of India (IDBI) and soft loan assistance from Japan under overseas economic cooperation fund (OECF) scheme," said P Srinivasa Rao, the bank's chief general manager (north).

"We are concerned about the future and as things stand today, we do not see many of these supports continuing," Rao said.

Under the OECF scheme, the government bears the cost of exchange fluctuation risk and transfers loans to Sidbi at low rates of interest. Till date, it received 110 billion Japanese yen under the scheme, an important part of its portfolio. "The governmen has communicated that it would not like to play the role of intermediary in future and not ready to bear the fluctuation risks'', Rao said.

The RBI is also drastically cutting down assistance out of National Industrial Credit (long-term operations) Fund and reducing statutory liquidity ratio (SLR) bond quota.

"In such a case, we would be forced to borrow from the market to a large extent at prevailing interest rate," he said.