FIs demand quarterly interest on tech fund

FIs demand quarterly interest on tech fund
PRESS TRUST OF INDIA

CHANDIGARH, DEC 3: Financial institutions (FIs) including the Industrial Development Bank of India, implementing the Rs 25,000 crore technology upgradation fund (TUF) for the textiles sector, have sought a quarterly reimbursement of the five per cent interest support extended to companies as against the present half yearly refund system.

"We have asked the government to make suitable changes in the reimbursement rules to enable us get the interest support on a quarterly basis as companies were paying up the interest on the principal every three months,'' IDBI executive director R S Agarwal said here yesterday.

Under the TUF launched on April 1 this year, government through various implementing agencies extend five percentage points interest subsidies to textile units to upgrade and modernise plants to gain competitiveness in the post-multi fibre arrangement era beginning 2005.

Currently the FIs make the interest refund to the companies on a quarterly basis, though the institutions are refunded the concessions only on a half-yearly basis. Textiles secretary Shyamal Ghosh said the government was open to the demand of the financial institutions for a quarterly refund.The premier lending bank would also soon take a decision about lending to 26 more units involving project cost of Rs 937 crore with the institution's share being about Rs 330 crore, Agarwal said.

Responding to demands that the FIs extend the same concessional finance to schemes approved before the launch of TUF, he said "the institutions are open to such pleas but the decisions would very from cases to case depending on the merit of the scheme". Total sanctions under the TUF scheme by IDBI, IFCI, ICICI Exim Bank and SIDBI till October 31 was Rs 1158 crore involving a project cost of Rs 2351 crore of 62 units, Agarwal said.