Idbi Plumps For T & R Accounts

The Industrial Development Bank of India (IDBI) has started asking borrowers to open a trust and retention (T&R) account, especially in the case of large projects where the asset are not sufficient as security.

According to senior IDBI officials, "The practice of asking companies to open a T&R account began in 1999-2000, and about three companies which were primarily in the telecom industry were asked to open such accounts."

"Since the assets of the company are not sufficient, last year IDBI decided to ask corporates to open the T&R account to serve as an additional security feature," they said. Through this account, the entire cash flow is monitored during the implementation period and operation phase of the project.

 

Opening a T&R account was also stipulated for steel companies that sought additional financial support from IDBI at the beginning of 1999.

This apart, IDBI has also resorted to appointing reputed consultants as lenders' engineers for monitoring implementation of the project and the various financial and technical parameters during the operation of the project.

Over the last two years, IDBI has also been resorting to stipulating additional security such as pledge of promoters' equity and other collateral, as also conversion of loan into equity.

According to the FI's balance sheet, IDBI entered into 124 one-time settlement (OTS) of dues in hard core cases in terms of which Rs 523 crore was recovered towards principal and another Rs 99 crore towards interest.

IDBI said that recovery made in respect of OTS cases during the year was Rs 282 crore as against Rs 107 crore in the previous year.

As per the balance sheet, the restructuring committees, set up in various zones to tackle non-performing assets (NPAs), have considered 161 cases for restructuring.

The empowered committee, chaired by the deputy managing director, has considered 198 cases, while the high-powered committee chaired by the chairman and managing director has considered 30 proposals.

During 1999-2000, IDBI was appointed as operating agency for 128 cases by the Board for Industrial and Financial Reconstruction (BIFR).