Besides, the institutions have also decided to carry out a fresh viability study of the steel projects. They are also insisting that banks should continue to meet the working capital requirements of the projects while institutions draw up the plan to pump fresh funds into the industry.

However, the chiefs of the financial institutions who met here today could not arrive at any concrete strategy to protect their exposure in the recession-hit steel sector. ``We should not stop lending to the entire industry... just because the industry is facing a cyclical downturn,'' said an FI chief after attending a three-hour long meeting. ``There are good companieswhich can be provided with more funds to tide over the current crisis,'' he added.

But as today's meeting remained inconclusive, the financial institutions will again meet in the next few weeks to review their meeting on the steel industry's prospects. ``We will ask all steel companies to give fresh applications for reschedulement of loans,'' said IDBI chairman G P Gupta, indicating the willingness of FIs to restructure the loans extended to steel companies.

The exposure of institutions to the steel sector has already reached an alarmingly high level of Rs 20,000 crore. As the prospects for the entire industry have turned bleak, the institutions called an emergency meeting here to discuss a bail-out package. With poor demand and sharp fall in profits affecting their bottom lines, steel companies were finding it difficult to service the huge loans taken by them.The institutions are also planning to work out a similar package for the textiles industry. "The issue will be discussed in detail at the nextmeeting," sources said.The institutions may move the finance ministry seeking duty relief to the steel companies in the present context. "All we want is some sort of a comfort which will encourage us to take fresh exposures in steel industry," sources said. The government is apparently in favour of institutions considering reschedulement of loans.

Essar Steel tops the list of institutional borrowers among steel companies with Rs 5,059.86 crore followed by Ispat Industries (Rs 4,080.16 crore) and Jindal Vijaynagar Steel (Rs 1,508.86 crore). Among the other major borrowers are: Lloyds Steel with Rs 1,171.25 crore, Malvika Steel (Rs 934.99 crore), Usha Ispat (Rs 433.33 crore) and Rajinder Steel (Rs 403.99 crore).

Tisco, which has a total borrowing of Rs 4,578.98 crore, is believed to have refrained from requesting any relief from the FIs in this meeting.The union steel secretary A K Basu had gone on record last week saying that FIs should consider rescheduling loan repayment in order to give the upcomingsteel plants a longer period for repayments. However, merchant bankers are skeptical about the rescheduling plans of FIs. ``There was a failure in carrying out due diligence and project appraisal especially in terms of demand and production.