Bangalore: The Union finance ministry has turned down a request from the shipping ministry to set up a Rs10,000 crore soft loan corpus to part-finance a $20 billion ship-purchase plan of local shipowners. “The government is not committed to providing soft loan for acquisition of ships in the liberalization era on account of the current financial meltdown,” Union shipping minister G.K. Vasan told the Lok Sabha on Monday.
The Indian Banks’ Association had constituted a working group to examine the proposed extension of credit facilities to shipping firms in India for purchase of ships. “The Indian Banks’ Association has, however, recently advised that they have no role to play in the matter...,” Vasan stated.
Indian shipowners have so far relied heavily on European banks for their financing needs, because funding from these specialist banks was much cheaper than local funds.