India - Second Idbi Project : Loan 1260 - Loan Agreement - Conformed

CONFORMED COPY LoAN NUmBER 1260 IN WAN AGREEMENT (Second IDBI Project) between INDIA and INTERNATIONAL BANK FOR RECOW8TRUCTION AND DEVELOPMENT Dated June 10, 1976 LOAN AGREEMENT AGREEMENT, dated June 10, 1976, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agree- ment by making the Loan as hereinafter provided; (B) the Project will be carried out by Industrial Develop- ment Bank of India with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Industrial Development Bank of India the proceeds of the Loan as hereinafter provided; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in a project agree- ment of even date herewith between the Bank and Industrial Develop- Bank of India; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Schedule 2 to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being herein- after called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth L-,d the following additional terms have the following meanings: (a) "IDBI Act" means the Industrial Development Bank of India Act, No. 18 of 1964, as amended to the date of this Agree- ment; (b) "IDBI" means Industrial Development Bank of India, a body corporate established under the IDBI Act; (c) "Project Agreement" means the agreement between the Bank and IDBI of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; -3- (d) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and IDBI pursuant to Section 3.02 (a) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (e) "SFC Act" means the State Financial Corporations Act, No. 63 of 1951, as amended to the date of this Agreement; (f) "SFC" means a state financial corporation established under the SFC Act and includes the Tamil Nadu Industrial Invest- ment Corporation Limited and such other financial institutions notified by the Borrower pursuant to Section 46 of the SFC Act as may from time to time be agreed upon between the Borrower and the Bank; (g) "sub-loan" means a loan or credit made or proposed to be made by an SFC to an Investment Enterprise to carry out an Investment Project and which includes financing provided or to be provided by IDBI; (h) "free-limit sub-loan" means a sub-loan which qualifies as a free-limit sub-loan pursuant to the provisions of Section 2.02 (b) of this Agreement; (i) "Investment Enterprise" means an enterprise to which an SFC has made or proposes to make a sub-loan; (j) "Investment Project" means a specific development proj- ect which includes imported itens to be paid for in foreign cur- rency; (k) "Prior Credit Agreement" means the Development Credit Agreement (Industrial Development Bank of India Project) between the Borrower and the Association dated February 9, 1973, and "Prior Credit" means the development credit provided for therein; (1) "Prior Project Agreement" means the Project Agreement (Industrial Development Bank of India Project) between the Asso- ciation and IDBI dated February 9, 1973; (m) "Rupees" and "Rs" mean the currency of the Borrower; (n) "foreign currency" means any currency other than the currency of the Borrower; and (o) "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by IDBI or by any one or more sub- sidiaries of IDBI or by IDBI and one or more of its subsidiaries. -5 ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or re- ferred to, an amount in various currencies equivalent to forty million dollars ($40,000,000). Section 2.02. (a) Subject as set forth hereinafter and in Section 2.02 of the Project Agreement, the Borrower may withdraw from the Loan Account the equivalent of sixty-five per cent (65%) (or such other percentage as may be agreed upon from time to time between the Borrower and the Bank) of amounts expended by IDBI in refinancing sub-loans to cover the reasonable cost of goods and services required for Investment Projects; provided, however, that no withdrawal shall be made in respect of a sub-loan unless (i) the sub-loan shall have been approved by the Bank or (ii) the sub-loan shall be a free-limit sub-loan for which the Bank shall have authorized withdrawals from the Loan Account. (b) A free-limit sub-loan shall be a sub-loan in an amount to be refinanced by IDBI which, together with any other amount or amounts refinanced or proposed to be refinanced by IDBI for the same project or for any other project directly and materially re- lated thereto, and not repaid, shall not exceed in the aggregate the equivalent of one million Rupees (Rsl,000,000), provided, how- ever that in the case of a sub-loan by an SFC having made not less than two (2) prior sub-loans approved or authorized by the Bank under the provisions of this Agreement or by the Bank under the -6- provisions of the Prior Credit Agreement the amount hereinbefore stated shall be two million five hundred thousand Rupees (Rs2,500,000), and provided further that both the foregoing amounts shall be subject to change from time to time as agreed upon between the Borrower and the Bank. (c) Except as the Bank shall otherwise agree, no withdrawal shall be made in respect of any sub-loan to an Investment Enter- prise the paid-up share capital plus free reserves of which exceed the equivalent of ten million Rupees (RslO,000,000). (d) Except as the Bank shall otherwise agree, no withdrawal shall be made on account of expenditures made by an Investment Enterprise in respect of a sub-loan subject to the Bank's approval if such expenditures shall have been made more than one hundred and eighty days prior to the date on which the Bank shall have received in respect of such sub-loan the application and information required by Section 2.02 (a) of the Project Agreement, or under a free-limit sub-loan more than one hundred and eighty days prior to the date on which the Bank shall have received in respect of such sub-loan the request and information required by Section 2.02 (b) of the Project Agreement. Section 2.03. The Closing Date shall be June 30, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. -7- Section 2.05. The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.06. Interest and other charges shall be payable semi-annually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. Section 2.08. IDBI is designated as representative of the Borrower for the purposes of taking any action required or per- mitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. -8- ARTICLE III The Project; Relending to IDBI; Supervision of SFCs; Stady Section 3.01. The purpose of the Loan is to assist IDBI in financing the development of the small and medium-scale indus- trial sector in India and in improving the effectiveness of the SFCs as institutions catering to this sector. The Project consists of the refinancing by IDBI of specific development projects to be financed by the SFCs through loans to productive enterprises in India. Section 3.02. (a) The Borrower shall relend the proceeds of the Loan to IDBI under a subsidiary loan agreement to be entered into between the Borrower and IDBI under terms and conditions satisfactory to the Bank. (b) The Borrower shall exercise its rights under the Subsi- diary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Bor- rower shall not assign, nor amend, abrogate or waive the Subsi- diary Loan Agreement or any provision thereof. Section 3.03. Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall take and cause to be taken all action necessary or appro- priate to enable IDBI to perform all its obligations under the Project Agreement and the Subsidiary Loan Agreement, and shall -9 - not take or permit to be take a.ny action which would prevent or interfere with such performance. Section 3.04. Without any limitation or restriction upon any of the obligations of the Borrower under Section 3.03 of this Agreement, the Borrower shall take all action necessary to ensure the prompt importation of goods and services required for Investment Projects, including the granting of all licenses, foreign exchange permits and other approvals. - 10- ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of for- eign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or per- mitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or admini- strative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfac- tory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; 0 -11 - and (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilizat5on fund, or similar functions, for the Borrower. - 12 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (k) thereof: (a) IDBI shall have failed to perform any covenant, agree- ment or obligation of IDBI under the Project Agreement or the Prior Project Agreement; (b) An extraordinary situation shall have arisen which shall make it improbeble that IDBI will be able to perform its obliga- tions under che Project Agreement or the Prior Project Agreement; ,c) IDBI shall have become unable to pay its debts as they ma'ure or any action or proceeding shall have been taken by IDBI or by others whereby any of the property of IDBI shall or may be distributed among its creditors; (d) The IDBI Act, or the SFC Act, or the operating guidelines referred to in Section 2.02 (c) (i) of the Project Agreement or any institutional development program referred to in Section 2.02 (c) (ii) of the Project Agreement shall have been amended, sus- pend d, abrogated,'repealed or waived so as, in the judgment of the Bank, to materially affect the carrying out of the Project or the operations or financial condition of IDBI or any of the SFCs; - 13 - (e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of IDBI or any of the SFCs or for the suspension of operations of IDBI or any of the SFCs; and (f) A subsidiary or any other entity shall have been created or acquired or taken over by IDBI, if such creation, acquisition or taking over would, in the judgment of the Bank, adversely af- fect the carrying out of the Project. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (c), (d), (e) or (f) of Section 5.01 of this Agreement shall occur. - 1~4- ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement with- ,in the meaning of Section 12.01 (c) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of IDBI have been duly authorized or ratified by all nec- essary corporate and governmental action; and (b) the execution and delivery of the Subsidiary Loan Agree- ment on behalf of the Borrower and IDBI, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action. Section 6.02. The following are specified as additional mat- ters, within the meaning of Section 12.02 (c) of the General Con- ditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, IDBI and is legally binding upon IDBI in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly auth- orized or ratified by, and executed and delivered on behalf of, the Borrower and IDBI, respectively, and is legally binding upon the Borrower and IDBI in accordance with its terms. -15 - Section 6.03. The date August 10, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. - 16 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. -17 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ T. N. Kaul Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ E. Stern Regional Vice President South Asia - 18 - SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* July 1, 1979 100,000 January 1, 1980 200,000 July 1, 1980 500,000 January 1, 1981 700,000 July 1, 1981 1,000,000 January 1, 1982 1,100,000 July 1, 1982 1,300,000 January 1, 1983 1,400,000 July 1, 1983 1,500,000 January 1, 1984 1,600,000 July 1, 1984 1,800,000 January 1, 1985 1,900,000 July 1, 1985 2,000,000 January 1, 1986 2,100,000 July 1, 1986 2,100,000 January 1, 1987 2,100,000 July 1, 1987 2,100,000 January 1, 1988 2,100,000 July 1, 1988 2,100,000 January 1, 1989 2,000,000 July 1, 1989 1,900,000 January 1, 1990 1,700,000 July 1, 1990 1,500,000 January 1, 1991 1,300,000 July 1, 1991 1,100,000 January 1, 1992 1,000,000 July 1, 1992 800,000 January 1, 1993 600,000 July 1, 1993 300,000 January 1, 1994 100,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. -19 - Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1-1/4% More than three years but not more than six years before maturity 2-1/2% More than six years but not more than eleven years before maturity 4-1/2% More than eleven years but not more than fourteen years before maturity 6-3/4% More than fourteen years but not more than sixteen years before maturity 7-1/2% More than sixteen years before maturity 8-1/2% - 20 SCHEDULE 2 Modifications of General Conditions For the purpose of the Loan Agreement, the provisions of the General Conditions are modified as follows: (1) The words "Investment Projects" are substituted for the words "the Project" at the end of Section 5.03. (2) Section 6.03 is deleted and replaced by the follow- ing new Section: "Section 6.03. Cancellation by the Bank. If (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspended with respect to any amount of the Loan for a continuous period of thirty days or (b) by the date specified in Section 2.02 (d) of the Project Agreement no requests permitted under Section 2.02 of the Project Agreement shall have been received by the Bank in respect of any portion of the Loan or, having been so received, shall have benn denied, or (c) after the Clos- ing Date an amount of the Loan shall remain unwithdrawn from the Loan Account, the Bank may by notice to the Bor- rower terminate the right of the Borrower to submit such requests or to make withdrawals from the Loan Account, as the case may be, with respect to such amount or portion of the Loan. Upon the giving of such notice such amount or portion of the Loan shall be cancelled."