According to IDBI chairman G P Gupta, the conditions would include conversion of the entire advances into equity if it was decided that a project was being poorly managed. ``The conditions would also include pledging of promoters' shareholding upto 51 per cent with the FIs,'' Gupta said.

The IDBI has also decided to reduce its exposure to the steel sector which has not performed well in the recent past and shift its focus to sectors like infotech, pharma and agro food processing industry. Gupta said the institution would not provide any loans to new steel projects. It will continue funding various ongoing steel projects. ``We're considering fresh loans to such projects,'' Guptasaid.

Institutions are expected to consider extending fresh loans to Essar Steel, Ispat, Jindal Iron, Rajinder Steel, Usha Ispat and others. In fact, IDBI has already prepared a list of 14 steel companies which need funds urgently. ``FIs have already put in over Rs 14,000 crore in these projects. Around Rs 25,000 crore is needed to complete these projects. It is also true that steel companies are not doing well,'' said an IDBI official.

The IDBI chairman said the IDBI's present exposure in steel at 14 per cent will be reduced gradually in the coming years. Gupta was, on the other hand, quite optimistic about the future of cement industry and said that he is hopeful of some better performance of this sector despite some difficulties faced by it.

Of the additional funding requirement of 14 large new steel projects amounting to Rs 7,740 crore, IDBI's share amounts to Rs 2,128 crore. IDBI has already advanced Rs 4,353 crore, against the total FI exposure aggregating Rs 14,120 crore. The cumulative projectcost of the 14 new plants including Essar Steel, Ispat Industries, Jindal Vijayanagar Steel, Lloyds Steel, Usha Ispat and Malvika Steels, was Rs 24,572 crore, but all these projects have had huge cost over-runs totalling over Rs 10,100 crore.

"Even in the case of Essar Steel which has been completed, FIs would apply the stringent conditions while making disbursements for its pelletisation project," Gupta said, adding that Essar Steel also requires funds to retire international borrowings of $ 90 million ($ 40 million in March/April and $ 50 million in June.

Referring to the harsh conditions to be stipulated when additional funds are made available to steel projects, Gupta said FIs would try to "ensure good corporate governance, which is important". ``IDBI is also considering the setting up a Trust and Retention Fund which will ensure that promoters do not divert funds to other projects. The fund will be in the nature of an escrow account into which the cash inflows from ongoing projects will come into theaccount. "Institutions will have first charge over the fund," Gupta said.

When pointed out the record fall in the IDBI's share prices from Rs 130 to Rs 33, Gupta said that the share prices of the financial institutions and banks have came down considerably due to various reasons including worldwide recession and ruled out that only domestic problems as well as the bank's exposure to the sectors which have not performed well in the recent past were the reasons for the same.

The IDBI chairman also ruled out possibility on the buying back of its own shares from the market in the present circumstances. The bank is working out on its strategy for the revival of the secondary market and the Rs 500 crore package plan has yet to be finalised in this regard, he said.