New Delhi, Nov 04: The finance ministry will shortly give IDBI the go-ahead to raise 500 million dollars through external commercial borrowings for the restructuring of steel and textile companies. "IDBI has proposed to raise 500 million dollar through ECBs. They will get the approval as the funds would be used for restructuring steel and textile companies," a senior finance ministry official told news agencies here today.


IDBI hopes to get the government's approval and raise the funds within this fiscal year.

IDBI plans to appoint one or more reputed foreign banks to arrange for the ECB at 1.75-1.85 per cent above libor. The move to go for cheaper sources of funds comes in the wake of IDBI's huge exposure in steel (about Rs 20,000 crore) and textile (about Rs 10,000 crore).

Although the government is discouraging ECBs above $100 million, the finance ministry had earlier cleared ICICI Bank's 300 million dollar ECB as the bank would use it for ailing steel companies.

IDBI would be given the permission on similar grounds, ministry official said.
Apart from the ECB, the country's leading fi plans to hit the market with its tax-savings bonds soon after Sebi clearance.

IDBI had already obtained umbrella approval from the finance ministry for raising Rs 3,000 crore -- Rs 1,500 issue with a green-shoe option to retain another Rs 1,500 crore, sources said.

Bureau Report