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IDBI says not facing liquidity problem
The Industrial Development Bank of India (IDBI), the country`s largest term lender, has denied media and analyst speculation it could be facing a liquidity problem.
The Industrial Development Bank of India (IDBI), the country's largest term lender, has denied media and analyst speculation it could be facing a liquidity problem.
"IDBI does not experience any liquidity problem to seek succour or a bailout from (the) government or any other agency," the state-run term lender said in a statement.
IDBI's shares dropped 1.77 percent to a year-low of 16.60 rupees on Thursday, adding to two percent losses on Tuesday, after markets interpreted its move to ask the central bank for a 50-year soft loan as a sign it faced a liquidity problem.
Markets were closed on Wednesday to mark festivities of Lord Ganesha.
A central bank source told Reuters on Monday that IDBI had asked the Reserve Bank of India (RBI) for a loan of 14.40 billion rupees on concessional terms and with a maturity of 50 years. The move, which came a month after the Credit Rating Information Service of India Ltd downgraded IDBI's bonds and certificates of deposit to high from highest safety, sparked concern among investors, analysts and the media that the financial institution was facing a mismatch in funds flow.
IDBI dismissed the speculation.
"The suggestion for conversion of outstanding borrowing from RBI into 50-year loan was not due to liquidity constraints but for (an) asset-liability requirement to finance long term infrastructure projects," the statement said.
The move, which came a month after the Credit Rating Information Service of India Ltd downgraded IDBI's bonds and certificates of deposit to high from highest safety, sparked concern among investors, analysts and the media that the financial institution was facing a mismatch in funds flow.
IDBI dismissed the speculation.
"The suggestion for conversion of outstanding borrowing from RBI into 50-year loan was not due to liquidity constraints but for (an) asset-liability requirement to finance long term infrastructure projects," the statement said.
IDBI said it prepaid high cost borrowings of 39 billion rupees in 2000/01 (April-March) by exercising call options and was targeting similar advance payments of another 30 billion rupees in the current fiscal.
"This should bear ample testimony to IDBI's comfortable liquidity position and public confidence. It may be mentioned that the entire debt servicing of 167.40 billion rupees during the last fiscal year was met by internal generation," it said.
"IDBI does not experience any liquidity problem to seek succour or a bailout from (the) government or any other agency," the state-run term lender said in a statement.
IDBI's shares dropped 1.77 percent to a year-low of 16.60 rupees on Thursday, adding to two percent losses on Tuesday, after markets interpreted its move to ask the central bank for a 50-year soft loan as a sign it faced a liquidity problem.
Markets were closed on Wednesday to mark festivities of Lord Ganesha.
A central bank source told Reuters on Monday that IDBI had asked the Reserve Bank of India (RBI) for a loan of 14.40 billion rupees on concessional terms and with a maturity of 50 years. The move, which came a month after the Credit Rating Information Service of India Ltd downgraded IDBI's bonds and certificates of deposit to high from highest safety, sparked concern among investors, analysts and the media that the financial institution was facing a mismatch in funds flow.
IDBI dismissed the speculation.
"The suggestion for conversion of outstanding borrowing from RBI into 50-year loan was not due to liquidity constraints but for (an) asset-liability requirement to finance long term infrastructure projects," the statement said.
The move, which came a month after the Credit Rating Information Service of India Ltd downgraded IDBI's bonds and certificates of deposit to high from highest safety, sparked concern among investors, analysts and the media that the financial institution was facing a mismatch in funds flow.
IDBI dismissed the speculation.
"The suggestion for conversion of outstanding borrowing from RBI into 50-year loan was not due to liquidity constraints but for (an) asset-liability requirement to finance long term infrastructure projects," the statement said.
IDBI said it prepaid high cost borrowings of 39 billion rupees in 2000/01 (April-March) by exercising call options and was targeting similar advance payments of another 30 billion rupees in the current fiscal.
"This should bear ample testimony to IDBI's comfortable liquidity position and public confidence. It may be mentioned that the entire debt servicing of 167.40 billion rupees during the last fiscal year was met by internal generation," it said.
Bureau Report