SIDBI to raise Rs 2,500 crore via debts

New Delhi: Small Industries Development Bank of India (SIDBI) plans to raise Rs 2,500 crore through domestic bonds issues and foreign loans this fiscal to increase credit flow to the small-scale sector.

"We are expecting to raise a total Rs 2,500 crore through these domestic and foreign debts this fiscal," says SIDBI chairman P B Nimbalkar. "SIDBI has been allowed in the Budget to issue capital gains bonds under section 54 EC of the Income Tax Act. We are planning to raise Rs 1,000 crore through bonds issue this fiscal."

The capital gains bond, which will be floated on an on-tap basis from June-July 2002 onwards, is expected to have a maturity period of minimum three-to-five years, he says. "The interest rate on these bonds will depend on market conditions." SIDBI is also planning to mop up Rs 900-1,000 crore this fiscal through its priority-sector bond issue, which received overwhelming response mopping up about Rs 1,200 crore last fiscal against a target of Rs 1,000 crore, says Nimbalkar. He says the bank is negotiating with German Development Bank for a 30-million deutsche mark (about Rs 65 crore) line-of-credit for providing loans to companies eager to adopt a clean technology.