Announcement of Loan to ICICI in India on June 5, 1963

... W O R L D B IA iN,. K • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25 1 D. C. TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 63/19 Sub,ject: Loan to ICICI June 5, 1963 in India The World Bank today made a loan equivalent to $30 million to the Industrial Credit and Investment Corporation of India Limited (ICICI), a privately owned and managed development corporation established to promote the growth of private indus- try in India. Like four earlier Bank loans to ICICI aggregating $6o million, this loan will be used to meet the foreign exchange requirements of projects financed by the Corpor~tion • • ICICI was organized in 1955 with the advice and assistance of the World Bank and has since become the largest and most successful development finance corpore.- tion with which the :Bank has been associated. In rts eight yea.rs of operation it has approved financial aooista.nce for 200 industrial projects involving 183 firms for a total amount of 601 million rupees ($127 million equivalent). Of this total, nearly half is accounted for by foreign exchange loans, a fourth by rupee loans and the bal~).Uce by underwriting operations and rlirect equity investments. Among the industr:ies receiving financial assistance from ICICI have been iron and steel, chemical, electrical, mechanical, paper and pulp, shipping, food-processing, textile, met.al products, glass, cement and other building materials. ICICI has been successful in mobilizing botr· local and foreign private parti- cipation in its financing operations and in assisting the expansion of the capital • market. It is estimated that its operations have resulted in mobilizing a total capital investment equivalent to some $650 million or five times that of its own investments, and in a direct increase of some 60,000 additional jobs. An important  } ~ .. investments. - 2 - feature of ICICI's contribution to the Indian economy has been the quality of its They have come to be more concentrated in newer manufactures such as • paper and paperboard, wire ropes, electric cables and steel tubes which, if im- ported, would require scarce foreign exchange resources. Also, many of ICICI' s recent investments have been in such basic industries as engineering and heavy chemicals which stimulate further industrialization. It is in these industries, new to India, where the high standard of appraisal carried out by IOICI has been particularly valuable in developing sound projects, and it is often through them that foreign capital and technical knowledge have come to India. The capital market in India has undergone striking development in recent years. The number of shareholders has increased, reaching about one million; many institu- tions, both public a.nd private, have taken a greater interest in assisting industry by ~nvestment in shares and debentures. In its early days, ICICI set the pace for • other institutions in underwriting, but recently ICICI has been joined by others in underwriting large issues. ICICI has also aided the development of the capital market by making ava..ilable for purchase a small but attractive selection of securi- ties from its own portfolio. ICICI is held in high esteem both by the Indian Government and by other finan- cial institutions. The Corporation has also developed a close relationship with development fj.nance corporations outside Inctia and plans to enlarge its program of technical assistance to new inst.itutions of this type. Including the $30 million loan made today ani1. the $6o million lent earlier by the World Bank, ICICI's total resources amount to Rs. 723 million ($152 ~illion). These resources include Rs. SO million of paid-in share capital, 71. 6% of which is held by Indian shareholders and the balance by British, American, German and Japanese private interests; Rs. 175 million of advances and credits from the •  ... ' • - 3 - Government of India; lines of credit amounting to $5 million from the United States Agency for International nevelopment and ll~5 million ($6.3 million) from Kredit'.3.D.- stalt fur Wiederau:f'bau; and surplus and reserves of about Rs. 16 million. ICICI's financial operations are expected to continue at the high level of the past few years, and the Corporation consequently will have to increase both its foreign exchange and rupee resources. The l3ank loan of $30 million, together with the balances still available from existing loans, should meet ICICI's foreign ex- change requirements until the early part of 1965. ICICI is also making arrange- ments to obtain some additi.onal Rs. 100 million of rupee funds. Under the terms of the :Bank loan, interest chai\ged on each part of the loan will be at the Bank's current rate when that part is committed for one, '1f ICICI' s projects. At that time, the Bank and ICICI will agree on an amortization ~chedule • for repayment of that part of the loan. These amortization schedules will provide for semi-annual repayments and for final repayment of the entire $30 million loan not later than December 1, 1978. The loan is guaranteed by the Government of India . •