IFC open to finance SEZs, invests in HDFC bank bondsThursday
Posted by dealcurry on October 18, 2006
From Zee News
October 12, 2006
International Finance Corporation, the private lending arm of World Bank, on Thursday said it is open to finance large special economic zones in India. “We are open to SEZs. We will be happy to finance large SEZs,” IFC executive vice president Lars H Thunell said here. He said the investment proposals should be good enough to be considered by the financial institution. Though the centre has cleared many SEZ proposals, funding these projects has become a problem as Reserve Bank has asked the banks to treat lending to SEZs on same parameters as to commercial real estte sector. That means banks have to give risk weightage of 150 per cent and make one per cent provisioning of the total amount lent to SEZs. IFC today invested USD 100 million in tier II bonds of HDFC Bank and gave USD 5,00,000 grant to an NGO to set up a fund to finance young entrepreneurs. The upper tier II bonds maturing in 15 years, carry an interest rate of 122.5 basis points (1.2 per cent) over Libor (London inter bank offered rate). “IFC`s investment in HDFC bank reflects our larger goal of developing and strengthening the financial sector in emerging markets,” Thunell said. This is the first domestic foreign upper tier II bonds issue after reserve bank came out with upper tier II norms, HDFC Bank Managing Director Aditya Puri said. The IFC investment (about Rs 450 crore) will help the bank, which raised Rs 740 crore in bonds after June this year, to significantly increase its capital adequacy ratio from 11.7 per cent.
