MOVE TO RESOLVE LIQUIDITY PROBLEMS OF PROJECT EXPORTERS IN IRAQ - PRESS NOTE

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The government has cleared the proposal of the Ministry of Commerce and Industry, to resolve the liquidity problems of such of the project exporters as had executed projects in Iraq on deferred payment basis ab-initio, but were outside the ambit of Deferred Payment Agreement signed between the governments of India and Iraq. Their dues remain non-realised from Iraq. As a result, they were not in a position to service the loans taken by them from Exim Bank and other commercial banks against construction work policies and counter-guarantees given by the Ministry of Railways even in one of the cases. Accordingly, their debts/liabilities have been declared as Non-Performing Assets (NPAs) by the lending banks/financial institutions.

The Reserve Bank of India (RBI) would now be issuing seven-year bonds to cover these outstanding dues and these bonds would be guaranteed by the Government of India. Keeping in view the Iraq situation, it is expected that the proposed move would accelerate the project exports which have been adversely affected over the years and the chances of securing overseas projects by Indian companies would be bright. At the same time, it will also help the lending banks/Fis to wipe out/reduce their NPAs.