Announcement of 50 Million Dollar Loan to ICICI in India on May 28, 1965

INTERNATIONAL BANK FOR • RECONS"TRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 65/26 Subject: $50 million loan to May 28, 1965 ICICI in India ·The World Bank has approved a loan equivalent to $50 million to the Industrial Credit ~nd Investment Corporation of India Limited (ICICI), a privately owned and managed ~evelopment finance company which invests in private industrial el"terprises in India. The loan will replenish the resources of the ICICI» enabling it to continue its' foreign exchange lending~ ' ICICI was organized in 1955 with the advice and assistance of the World Bank and has since be~OJDe __ t:bt\ development finance company wit.h which t:he Bank \.. - J ~-~2P.s.t • has been associated. The loan announced today is the sixth to be made by the Bank to ICICI and brings .the total amount of Bank lending to the Corporation to $140 million. It is the Bank's largest loan to ICICI and also the largest yet to be made by the Bank to any development finance company. In its 10 years of operation, ICICI has approved financial assistance totaling 1,023 million rupees ($215 million) for 374 projects. About half the financing is accounted for by foreign exchange loans, a fourth by rupee loans and the balance by underwriting operations and direct equity investments. Among the industries receiving financial assistance from ICICI have been those producing chemicals and chemical products, iron and steel, machinery, metal products, electrical equipment, paper, cement and other building materials, automobiles, textiles, food products, glass and pottery. ICICI has concentrated on those ,industries, such as machinery, machine tools and chemicals, that,,are relatively new in India. About a third of • the 12S projects which have already come into production were sponsored·by entre- preneurs entering inci~stry for the first time. !\  - 2 .. In addition to its financial operations, ICICI bas contributed in other ways -- to the growth of private industry in india. The high etandar~s it requires in the preparation of projects have already had a beneficial effect on Indian finance and industry. ICICI has been successful in mobilizing both local and foreign private participation in its financing operations and in assisting the expansion of the capital market through its numerous underwriting activities. It is estimated that ICICI's operations-have resulted in the mobilization of a total capital investment · equivalent to some t> .-1.60 million, or nearly six times the amount of its own approved investments. When all the projects now being financed are in operation, ICICI estimates that tbe'y will add about Rs. 4 billion ($840 million) a year to gross domestic product and create o_ver 100,000 additional jobs. W~th the continued growth expected in the private industrial sector in India, ..___ -~~---- .. - the demand for ICICI financing is expected to rise, particularly for foreign ex- change loans. ICICI expects its financial operations to amount to about Rs. 200 million ($42 million) in 196S, rising to Rs. 290 million ($61 million) in 1970. 1 • The Bank loan announced today will cover the bulk of ICICI's foreign exchange re- quirements until mid-1967. The Corporation is also taking steps to increase its rupee funds. Inclµding the $SO million loan announced today &nd the $90 million lent earlier by the World Bank, ICICI's total resources now amount to Rs, 1,080 mil• lion ($225 million). These resources include Rs. SO million of paid•in share capital, of which 701 is held by !~dian shareholders and the balance by British, American, German, Franc~ and Japanese private interests; Rs. 275 million of ad- vances from the Government of India; lines of credit amounting to DM 3S million ($9 million) from the Kreditanstalt fUr Wiederaufb&\\ in Germany; $5 million from the, United States Agency for International Development; and surplus and reserves • of about Rs. 22 million.  - 3 - \ The Bank loan will bear interest at the rate of 511. pe~ annum. The schedule of repayments to the Bank will be subject to adjustment from time to time so that ICICI's rep,yments to the Bank will correspond approximately to borrowers' repay- , men ts to ICICI which are notc,\f o extend beyond fifteen years in each case. The ' !1 ;' loan is guaranteed by the Government of India • • •