Announcement of Formal Agreement to Lend Ten Million Dollars to Indian Corporation on March 14, 1955

FOR,, IMMEDIATE RELEASE r' INTERNATIONAL BANK FOR () .RECONSTRUCTION AND DEVf:LOPMENT (( <WORLD ·BANK) 1818 H STREET, N.W., WASHINGTON 25, O.C. TELEPHONE: EXECUTiVE 3-6360 ffiESS RELEASE NO • .387 SUBJECT: Bank enters Formal Agreement to lend ,March 14, 195S $10 million to Indian Corporation; The World Banl{ today entered into a formal agreement to lend $10 million to the Industrial Credit and Investment Corporation of India, Limited, a corporation newly formed by private investors ot India, the UnJted Kingdom and the United States to assist the growth or private industry in India. The new Corporation will make long and medium term loans to industrial enterprises; purchas~,shares or industrial enterprises; unden1rite new issues of securities; guarantee loans by other investors; and help industry to obtain • ,managerial, technical and administrative advice and assistance. As rapidly as is prudent, the Corporation will sell its loans and share holdings to other inve~tors., thereby expanding the capital market and recovering its own capital for further investment. The Corporation is the outgrowth of d7!,s'cussions conducted in India l•st year by Mr. Geor,ge D. Woods., Chairman of The First Bos ton Corporation., and Mr. Robert ;~ H. Craft., Executive Vice President of the American Securities Corporation., at the instance of the World Bank. Mr. Woods and Mr. Craft., acconpanied by• member ot the Bank's staff., visited India in Feb~&J:7 1954 to explore with(:nd:1,an industrial leadei-$ and with the Government the possib:i:lity of establishing such an institution. Dµring their visit, the main outlines of the CorpQra tion were agreed upon and f'\ a steering committee of praninent Indian industrialists was established to draw l1P detailed. plans. Subseqqently., British and Am.erican investors became interested in •• joining with India~ investors to provide equity capital for the new institution • In Dec,anber 19$4 the Bank announced that it wo~d make a loan of $10 Jrd.llion as soon ,flS the Corporatioh had come into being,; The Corporation was established under"' ~\\\ - 2 - , 1, ·Indian law on Jam-!:3.ry 5., 19SS., and was given a.uthority to commence bu~1ness on • March 2 of this ye~.r ~, The Corporation's initial share capital amounts to 50 million rupees (equivalent to $10.5 million)., of which Indian investors hold 35 million. Of the Indian subscription., rupees 20 million wa.s privately placed; the remainder was sold in the first half of February through a public offering which was ov~rsubscribed. British investors -- some of the Eastern Exchange Banks., the Co.mmonwe.alth Development Fina.nee Company., Ltd • ., several insurance companies and industrial fir1.11S -- have subscribed 10 million rupees ($2.1 million) of the Corporation's share capital. American in~.st~ors -- the Bank of America., the Rockefeller brothers., Olin Mathieson Chemical Corp. and Westinghouse El1ectric International Corporation., have subscribed 5 mill_ion rupees ($1.,050.,000). In addition., the Government of India has made a long-term, interest-free advance of 75 million rupees ($15,750,000) to the Corporation. The Corporation's offices have been established in Bombay; and P. s. Beale, • formerly Chief Cashier of the Bank of England, has tc1.ken up his duties as General Manager of the Corporation. The Board of Directors is a.s follows: Mudaliar of Madras, Chairman; A. D. Shroff of Bombay; G. D. Birla of Calcutta; Sir Rama.swami Kasturbhai ''ta.lbha.i of Bombay; Sir Biren Mookerjee of Calcuttal J. G. Beevor of the Comonwealth Development Finance Company, Ltd.; Sir William Cockburn of the Chartered Bank of India, Australia and China.; Russell Smith of the B~nk of America; Dharamsey Khatau of Bombay; Sir Badridas Goenka of Calcutta; ands. Bhootalinga.m of the Government of India. The Bank's loan is guaranteed by the Government of India. It is for a term of 1$ years and bears int~rest .of 4-5/8% per annum. The proceeds will be used for purchases of imported equipment., materials and services needed to carry out projects finaneed by the Corporation. The loan documents were signed for the Bank by Eugene R. Black., President., and • His Excellency G. L• Mehta., Ambassador of India in the United Gqarantee Agreement for the Gov3rrunent of India. Officers of Credit and Investment Corporation of India, Ltd.,, had already Agreement and forwarded it to Washington. States., signed the the Industrial signed the Loan '.