India - Fourth Industrial Credit and Investment Corporation Project

R E S T R I C T E D FILE Copy Report N o. P-277 This report was prepared for use within the Bank. It may not be publishied nor may it be quoted as representing the Bank's views. The Bank accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATIONS OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED February 20, 1962  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPIENT REPORT AND RECOMMENDATIONS OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED 1. I submit herewith the following report and recommendations on a proposed loan in an amount in various currencies equivalent to U.S. $20 million to the Industrial Credit and Investment Corporation of India Limited (ICICI). PART I - HISTORICAL 2. ICICI was incorporated seven years ago, on January 5, 1955. It was established to assist private industry in India by providing risk and loan capital, by promoting widespread distribution of industrial securities and by providing technical and administrative assistance for new enterprises. Its capital of Rs. 50 million ($10.5 million) is widely held by investors in India, the United Kingdom, the Federal Republic of Germany and the United States. The Bank assisted in ICICI's establishment and has already made three loans to it, the first in March 1955 of $10 million, the second in July 1959 of $10 million and the third in October 1960 of $20 million. When the corporation was founded, the Government of India granted ICICI an interest-free, 30-year advance of Rs. 75 million ($15.8 million) and in 1959, in conjunction with the Bank's second loan, extended an interest-bearing, 20-year line of credit of Rs. 100 million ($21 million). In March 1961 the U.S. Development Loan Fund made a loan of $5 million to ICICI. The formal- ities are now being completed for a line of credit of DM 5 million ($1.25 million) from the Kreditanstalt fuir ITiederaufbau, a public credit institu- tion of the Federal Republic of Germany. 3. As ICICI foresaw full commitment of its foreign exchange resources towards the end of 1961, it asked the Bank to consider a new loan. An appraisal mission visited India in the fall of 1961 and negotiations with ICICIls General Manager and with representatives of the Government of India were completed on February 13. 4. The proposed loan would be the Bank's thirtieth to India and would increase the total of Bank loans to India to $817.5 million, net of cancella- tions. The status of previous loans as of January 31, 1962 is as follows: ($ million) Total loans, net of cancellations 797.5 l/ of which has been repaid 83