Financial support from banks to Indian steelmakers

Financial support from banks to Indian steelmakers

Latest reports from India reveal that Banks and Financial Institutions (Fls) are considering to provide aid to the three major steelmakers of India, namely Essar Steel, Jindal Vijaynagar Steel and Ispat Industries. The matter is currently under discussion by the related financial institutions. By giving such aid it is aimed to support the steel industry in India via restructuring projects under the corporate debt restructuring framework. The companies are studied by the banks and financial institutions individually and reports will be prepared on them separately to determine details of restructuring program. Basically the interest rates will be taken down from the present level of 18% down to 10% to 14%. The reason behind the intention of providing the steelmakers with such aid is that iron and steel industry has the largest exposure to both the Industrial Development Bank of India (IDBI) and Industrial Financial Corporation of India (IFCI) and it is widely believed that helping the companies overcome their problems now would also mean heading to profitability of institutions by enabling these companies to offset their exposure to the sector.