These are untied loans, meaning SBI has freedom to use this money to lend. They also do not come with any conditions attached for lending to specific projects or programmes.
The country’s largest lender, State Bank of India, inked a pact to raise a $1-billion loan from Japan Bank for International Cooperation (JBIC) and other Japanese lenders like SMBC, MUFG Bank, and Mizuho Bank on Wednesday.
The loan will be used to provide funds to manufacturers, suppliers and dealers of Japanese automobiles in India.
These are untied loans, meaning SBI has freedom to use this money to lend.
They also do not come with any conditions attached for lending to specific projects or programmes.
C Venkat Nageswar, deputy managing director (International Banking Group), SBI, said the bank was entering such a pact for the first time with JBIC.
This will assist in achieving vision of making India “Atmanirbhar”, he said.
Out of $1 billion, $600 million will be financed by JBIC and $400 million by other participating banks.
JBIC will provide a guarantee for the portion co-financed by participating banks.
This is a five-year bilateral loan. At present, these are cheaper loans than funds raised from market, SBI officials said.
This money could be used by SBI’s international operations for overseas lending operations.
The loan is intended to promote smooth flow of funds for the whole range of business operations of Japanese automobile manufacturers in India, SBI said in a statement.
JBIC is a policy-based financial institution, wholly-owned by the Japanese government.
Masayuki Tanimoto, managing executive officer of JBIC, said: “As per one of the surveys, India is the most favoured nation for Japanese investment and this is one more step towards strong relationship between Japan and India.”
Photograph: Rupak De Chowdhury/Reuters