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April 21, 2001
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Money > Business Headlines > Report April 21, 2001 |
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Banks open to funding 3 barred firmsBS Banking Bureau The Sebi decision to bar BPL, Videocon International and Sterlite Industries from accessing capital markets will not stop commercial banks and financial institutions from lending to these corporates, either by way of working capital or project financing. "We will continue to extend loans to these companies unless they are commercially non-viable," said a senior executive with a bank. which has been lending to these companies. A senior institutional source said the FIs would extend money to these companies for any viable project. "We will not say no to them. However, if it is a big project they will be required to raise money through other avenues also like rights issue or debentures which they will not be in a position to do because of the Sebi restrictions," sources said. The chairman of a public sector bank said: "We have no problem (with these companies) and we will continue to extend loans (to them)." None of the three companies have defaulted in repaying bank loans. The list of bankers for Sterlite includes six foreign banks, two new private banks (HDFC Bank and ICICI Bank) and four state-run banks (State Bank, Canara, Punjab National and Syndicate). BPL deals with 13 banks including StanChart, Citi, HSBC and ICICI Bank while Videocon has relationship with 17 banks including SBI, BOI, BoB and a few SBI associates. Sebi chairman D R Mehta said the three companies cannot raise money through issuance of debt instruments in the capital markets. The three companies are expected to go in appeal against the Sebi order, which comes in the wake of a two-year investigation into the alleged price rigging by the promoters' in their scrips in mid-1998 with the help of Harshad Mehta. Denying them access to capital markets not only implies disallowing them from accessing equity finance but also from private placement of debt, coming out with commercial paper and tapping the inter-corporate deposits market. Powered by YOU MAY ALSO WANT TO READ:
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