India’s steel ministry will be holding a high-level meeting with Reserve Bank of India (RBI) and certain commercial banks to seek a “softening of terms” of loans to steel companies, a ministry official said on Monday, May 23. Negotiations will include lowering of interest rates or rescheduling of repayment periods of existing loan burdens of steel producers.
The meeting of the ministry and banks will also address complaints received from several local steel companies that Indian commercial banks are reluctant to extend new loans to steel companies, thereby impacting the completion of new projects undertaken by the steel producers.
Steel companies claim that banks will not extend any further loans to steel companies in view of the aggregate $7.4 billion credit extended to the steel sector which has now been categorized as ‘stressed’ by commercial banks, the ministry official said.
Earlier this month, the Indian government started working on creating a national sovereign fund, the National Investment and Infrastructure Fund, totaling $5.97 billion, and plans to use this fund to extend financial assistance to steel companies with stressed balance sheets, the official added.