Announcement of Twenty-Five Million US Dollars Loan to ICICI in India on September 13, 1967

• 18.18 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 67/46 Subject: $25 Million Loan to September 13, 1967 ICICI in India The World Bank has approved a loan equivalent to $25 million to the Industrial Credit and Investment Corporation of India (ICICI), a privately owned development finance company. The loan will provide ICICI with additional foreign exchange for. loans and investments in private industrial enterprises in India. ICICI, established in 1955, is the largest and one of the most successful development finance companies with which the Bank is associated. The loan an- nounced today is the seventh to be made by the Bank to ICICI and brings the total amount of Bank lending to the Corporation to $163.5 million. • In 12 years of operation ICICI approved financial assistance totaling the equivalent of $224 million for 546 projects. Its loans and investments have been distributed mainly among newer industrial sectors of the economy, such as ferrous metal products, chemicals and electrical equipment. Among projects it has assisted are those which combined will provide capacity for the production of about 7.5 million tons of cement, 175,000 tons of nitrogenous fertilizers, 220,000 td\ns of superphosphates and 225,000 tons of steel tubes. ICICI estimates that its financial assistance will result in a total capital mobilizatio,µ equivalent to approximately $1,400 million and provide employment for some 166, OCJO workers. ICICI' s role in bringing together local and foreign tech- nology and investment is demonstrated by the fact that over half the enterprises financed have foreign collaborators and nearly a third involve foreign investors. Within India itself, ICICI is noted for its high professional standards and its • insistence on careful preparatory work \, on projects submitted for consideration.  - 2 - The demand for ICICI's assistance in both rupees and foreign exchange has, in ~ general, shown a steady increase. There have been some setbacks, the most recent and severe having started in 1966. This slackening of demand coincided with ad- verse economic and business conditions in India which were the result of several factors, notably two years. of successive drought. Recently, however, there has been a subs·tantial increase in the number of applications and inquiries to ICICI for new foreign exch~. nge loans. The Bank loan announced today is necessary if ICICI is to process the large number of applications it now has before it and handle the increasing business it expects over the next year or so. At the end of December 1966, ICICI's resources amounted to the equivalent of about $199 million. These resources included 75 million rupees ($10 million) of paid-in share capital, of which 70% was held by Indian shareholders and the balance • by British, American, German, F~te.nch and Japanese private interests; Rs375 million ($50 million) of loans from the Government of India, and surplus and reserves of about Rs34 million ($4.5 million). In addition to th'· Bank's loans, ICICI has ob- tained foreign exchange resources through loans of $4.5 million from the United Statee Agency for International Development and DM60 mtllion ($15 million) from the Kreditanstalt £Ur Wiederaufbau of Germany. The Bank loan to ICICI will be guaranteed by the Government of India. Amorti- zation will be in semi-annual installments beginning in January 1970 and ending July 1, 1985. The Bank and ICICI will from time to time change the amortization schedule to conform substantially to the aggregate of the amortization schedules applicable to ICICI sub-loans made out of the proceeds of the Bank loan. Each part :of the loan credited for sub-loans will be allocated its own interest rate, which will be the Bank's current rate for new loans t~ similar borrowers at the time that part is credited to the loan account. •