India - Fifth Industrial Credit Project

Docuxent of The World Bank FOR OFFlCIAL USE ONLY Report No. 13253 PROJECT COMPLETION NOTE INDIA INDUSTRIAL CREDIT V (LOAN 340-IN) JUNE 30, 1994 This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   FOR OFFICIAL USE THE WORLD BANK Washigtion, D.C. 20433 U.S. A. Ofim of Dhbctor.Gewl OpUaloms Kvmiun June 30, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Note on India Industrial Credit V (Loan 340-IND) Attached is the Project Completion Note on India - Industrial Credit V (Loan 340-IN) prepared by the Asia and Pacific Regional Office. This loan was made on June 5, 1963, in the amount of $40 million and closed on December 31, 1967. The loan was similar to four earlier loans made to ICIC, which were designed to meet the foreign exchange requirements of projects financed by that corporation. Projects which were unfinished in Loan 340 were subsequently transferred to its successor, the Sixth Loan (Loan 414). OED, through Bank Report No. 949, dated December 17, 1975, has made an assessment of the Sixth, Seventh, and Eighth Loans to ICIC. The outcome of these subsequent operations was rated as satisfactory. Robert Picciotto by H. Eberhard Kopp Attachment This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.   PROJECT COMPLETION NOTE INDIA INDUSTRUIL CREDIT V (LOAN 340-IN) 1. On June 5, 1963, IBRD approved a $40 million loan to the Industrial Credit and Investment Corporation of India Ltd. (ICICI), with a closing date of December 31, 19661. The project was made effective on September 17, 1963. Similar to the four earlier Bank Loans to ICICI aggregating $60 million, the Loan was to meet the foreign exchange requirements of projects financed by the Corporation. 2. ICICI was organized in 1955 with assistance from the Bank. At the time of approval of this Loan, 200 industrial projects involving 183 firms totalling $127 million had been approved. ICICI had been funding industries such as iron and steel, chemical, electrical, material, paper and pulp, etc. 3. The major issues discussed during the preparation, appraisal and negotiations of the project was whether to give ICICI authority to approve projects upto $2 million without prior Bank approval. The limit at that time, as per Bank guidelines was $500,000. The matter was resolved at negotiations by agreeing to a side letter with ICICI which gave the Bank the right to reimpose limits if warranted. The Bank also agreed at negotiations to ICICI's request for an increase in the debt equity ratio from 3:1 to 4:1; this was necessary to give ICICI borrowing power. 4. The previous four Loans (Loan Nos: 109, 232, 269 and 312) had not been closed when the fifth was approved. As estimated, $40.6 million for 75 projects had been credited and $29.2 million disbursed under the previous four loans. Due to rapid commitments, a sixth loan to ICICI was approved in 1965 (Loan No. 414). 5. The Loan closing date was extended once upto December 31, 1967. The basis for the extension was that firms to which subloans had been approved were having problems obtaining import licenses. A second extension was also requested for similar reason but the Bank refused a second extension. The Bank in refusing the second extension suggested that the balances of various sub-projects covered under Loan 340-IN be transferred to Loan 414- IN. This decision resulted in 17 sub-projects amounting to $1.7 million being transferred. An undisbursed amount of $3.066 million was canceled in February 1968. 6. OED's report (No. 949) on the sixth Loan to ICICI has commended the institutions on its satisfactory progress in appraisal of subloans, market analyses and management. This progress has also resulted in the Bank's continued assistance to ICICI. Statement of Loans and Credits indicates a closing date of April 30, 1978 - which is the date when the repayment of the loan was completed.  ATTACHMENT PROJECT COMPLETION NOTE INDIA INDUSTRIAL CREDIT V (LOAN 340-IN) BASIC DATA Loan Amoun : X :0 X:-;f;00000:::0:000 f0:;i;jt;4: fl 00US$3i0.0 million: Approv9l Date: J i0t i0- Eiit une 4, 1963 Signing DRte: Jw~~~~~ie 5, 1963 Efftiv Date 0000eptember 17, 1967 C. osing fl.:: De1ember32, 1967