~//
                                                                                           ,J.' ...

                                                                                   w o-,R"'L   D      a· .A   N' K:



•    INTERNATIONAL BANK FOR
     RECONSTRUCTION AND DEVELOPMENT
     1818 H   STREET,   N.W., WASHINGTON 25 1 0. C.   TELEPHONE:   EXECUTIVE   3-6360




          Bank Press Release No. 62/11                     SUBJECT:       $20 million loan for
          February 28, 1962                                               private industry in India


                 The World Bank today made a loan equivalent to $20 million to the Industrial

          Credit and Investment Corporation of India Limited (ICICI), a privately owned and

          managed development bank established to promote the growth of private industry

          in India.     Like three earlier Bank loans to ICICI aggregating $40 million, this

          loan will be used to meet the foreign exchange requirements of projects financed

          by the Corporation.




•
                 ICICI was organized with the advice and a.ssistance of the Bank, and began

          its operations in 1955.      It makes long snd mr~cJinm-term loa.ns and equity invest-

          ments and engages in underwriting activities.            In adJ.ition, it pxm.rides technical

          advice and assistance in the establishment of new enterprioes.

                 In its seven years of operation, ICICI has approved financial assistance 0£

          427 million rupees ($90 million equivalent) to 133 industrial concerns, over half
          of which are new enterprises.       Loans have accounted for Rs. 296 million ($62 mil-

          lion), of which 60% have been in :f'o~eign exchange; direct share subscriptions, all

          of which have been in rupees, have accounted for Rs. 28.6 million ($6 million);

          and underwritings have am01mted to Rs. 102 million ( $21 million) •                         Funds from the

          earlier world Bank loans of $40 million have been allocated by ICICI to 73 com-

          panies for a number of different industries including electrical, chemical,

          mechanical, shipping, textile, fertilizer, food-processing, paper, glass, and

9'       building materials.
                                                 .
                                        - 2 -




                                                                                                •
       The expansion of: private industry is essential to the success of the Third

Five-Year Plan.    While ICICI's financial contribution represents only a small

part of the total investment in the private sector, it is important as a source

of foreign exchange for the private sector, as an agency for introducing new

forms of term financing and underw.ritin.g techniques, and as an intermediary for

arranging pa.:rticipation by other Indian and foreign investors in the financing

of Indian ind1:2strial enterprises>

       ICICI' s foreign exchange L:.1:nding has increased to a.n annual rate of about

$20 million.    Most of its foreign exchange resources have now been committed, and

the new loan will provide the additional foreign exchange the Corporation is ex-

pected to need over the next year.

       Including the new loan and the $40 million lent earlier by the Bank, ICICI's

total resources amount to Rs. 545 million ( $115 million equi val'ent).       .These re-

sources include Rs. 50 million of paid-in share capital,      ?oo/o   of which is held by

Indian shareholders and the balance by British, American and German private

interests; Rs. 175 million of ad~ances and credits from the Government of India;
                                                                                            •
a   $5 million loan from the former United states Development Loa.n Fund (now AID);
and Rs. 12 million of retained earnings.

       Interest will be applied to ea.ch part of the loan at the Bank's current rate

'When that pa.rt is committed for one of ICICI's projects.     At that time, the Bank
and ICICI will agree on an amortization schedule for repayment of that part of

the loan.    These amortization schedules 'Will provide for semi-annual repayments

on April 15 and October 15 and for final repayment of the entire $20 million

loan not later than April 15, 1977.     The loan is guaranteed by the Government of
India.

      This is the Bank's 30th loan in India and brings the gross total of Bank

lending there to $846 million.     Taking into account cancellations, sales of parts        •

of loans and repayments, 'the net a.mount held by the Bank is $690 million.