IFC plans finance SEZs

International Finance Corporation (IFC), the private lending arm of
World Bank, on Thursday, said it is open to finance large Special
Economic Zones in India.

International Finance Corporation (IFC), the private lending arm of
World Bank, on Thursday, said it is open to finance large Special
Economic Zones in India.

“We are open to SEZs. We will be happy to finance large SEZs,” IFC
Executive Vice President Lars H Thunell said here.

He said the investment proposals should be good enough to be considered
by the financial institution. Though the Centre has cleared many SEZ
proposals, funding these projects has become a problem as RBI has asked
the banks to treat lending to SEZs on same parameters as to commercial
real estate sector.

That means banks have to give risk weightage of 150 per cent and make
one per cent provisioning of the total amount lent to SEZs.

IFC also announced the investment of US$100 million in Tier II bonds of
HDFC Bank and gave US$5,00,000 grant to an NGO to set up a fund to
finance young entrepreneurs. The Upper Tier II bonds maturing in 15
years, carry an interest rate of 122.5 basis points (1.2 per cent) over
Libor (London Inter Bank Offered Rate).

“IFC’s investment in HDFC Bank reflects our larger goal of developing
and strengthening the financial sector in emerging markets,” Mr Thunell
said.
http://www.deccanherald.com/deccanherald/oct132006/business16513920061012.asp