AS India Inc gets on with its capital expansion programmes, banks are witnessing a

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rising number of financial closures.

Last week, IDBI closed Tata Teleservices’ Rs 5,330 crore financing, while SBI Caps concluded a Rs 700 crore loan for GTL Infrastructure. Similarly, Dalmia Cements closed a Rs 3,200 crore financing for its expansion programme with IDBI-led consortium.

IDBI-led consortium of 15 banks also financed a 1,320 mw power project, being set up by CLP India in Jhajjar, Haryana. And SBI Caps closed a Rs 80.3 crore eight-year loan last week for Prithvi Ferro Alloys. The 12.25 per cent loan is for setting up a ferro alloy plant, along with a captive power unit in West Bengal.

Bankers said long-term projects are attracting 11.5-12.5 per cent interest. Rate for short-term projects is 0.5-1 per cent less.

At the end of the first quarter, banks had sanctioned over Rs 100,000 crore – but had not disbursed the money. Smaller banks such as Union Bank of India, Bank of India and Bank of Baroda had sanctioned about Rs 10,000 crore to Rs 20,000 crore, while SBI had close to Rs 60,000 crore of money lying with it, as companies had held back their capacity expansion plans, according to bankers.

Banks are also depositing lesser amount in the reverse repo window with the Reserve Bank of India — from over Rs 130,000 crore last week to about Rs 70,000 crore on Thursday. Banks park their idle cash with the central bank.

A senior SBI official said, “It is certainly a growing trend with large number of companies picking up credit. Initially, it was infrastructure but now, the manufacturing companies, telecom companies and FMCG sector are coming forward for credit,” said a senior SBI official.

For Tata Teleservices, financing was undertaken by a consortium of public sector banks, with the lead arranger being IDBI Bank with Rs 130 crore exposure, while Punjab National Bank provided Rs 1,200 crore. Canara Bank, Syndicate Bank and Union Bank of India took an exposure of Rs 750 crore, Rs 600 crore and Rs 510 crore respectively.

Dalmia Cement was another Rs 3,200 crore project that closed with a consortium of 25 banks with each bank contributing Rs 100-400 crore on an average rate of interest was at 11.5 to 12.5 per cent.

The Rs 700 crore nine-year loan for GTL infrastructure by SBI Caps has repayment of 28 to 30 quarterly instalments, commencing in September 2011 and ending in June 2018.

“Bank credit is picking from telecom and manufacturing sectors, apart from the infrastructure companies which are coming forward to avail of bank credit. Telecom is certainly one sector which is growing on bank credit,” said a senior IDBI official.