India has a highly advanced and widespread network of financial institutions to
meet the short-term and long-term requirements of funds. A dynamic and vibrant
equity culture has evolved. A chain of Stock Exchanges, Mutual Funds, Merchant
Bankers. Bankers and Brokers provide the institutional mechanism to tap into the
enormous Indian money market.
Major international banking groups like Citibank, Bank of America, Grindlays Bank, Standard Chartered, Bank of Tokyo, Banque Nationale De Paris, Swiss Bank, Deutche Bank etc... have rapidly expanding operations in India. A large range of domestic banks also offer a wide portfolio of products and services to the corporate sector. Part of the equity capital and the total loan capital requirements of a project are subscribed to by State-level institutions like Kerala State Industrial Development Corporation (KSIDC) and National financing institutions like IDBI, IFCI and ICICI.
Projects are financed by a combination of long-term loans and equity with a debt : equity ratio averaging 1.5 : 1. The loan will be repayable in a period of 8 to 10 years depending on the debt servicing capacity with an initial moratorium of 2 years. Minimum promoters' contribution required for a project is 25 % of the project cost. Part of the promoters' contributions can be obtained from State-level institutions like KSIDC.
Maximum term loan eligibility is limited to 75% of the costs of fixed assets. Promoters also can raise equity from the primary market. For a public issue a minimum of 25% of the issued share capital should be offered to the public. Promoters should hold a minimum 25% of the issued share capital.