SBI had earlier allocated Rs 100 crore to PFC, which, according to the corporation's top brass, was not enough to cater to the needs of the power sector where the annual investment exceeds Rs 20,000 crore. The matter was finally resolved after the intervention of the power and finance ministries.

The interest rate for these additional funds will be the same at 12.75 per cent, as for the initial Rs 100 crore. Official sources said that in order to work out the modalities, a meeting was held in Mumbai last week between SBI managing director MP Radhakrishnan and PFC finance director TN Thakur.

Earlier, in a meeting with SBI chairman MS Verma, union power minister PR Kumaramangalam had also asked the bank to give PFC another Rs 1,000 crore out of resurgent bond proceeds.

After securing a total of Rs 500 crore out of RIB proceeds,PFC will now have to rework its borrowings plan for 1998-99, for which it has a target of Rs 2,000 crore, both from the domestic and international markets.

When contacted, Thakur said that following positive indications from SBI, PFC has decided to drop its plans of going ahead with the Rs 600-crore public bond issue. These fund requirements could now be met out of the additional credit, to be extended to the corporation out of the RIB proceeds.

Giving details of the market borrowings made for the current year, Thakur said that PFC has raised Rs 400 crore by way of loan syndication, tied up around Rs 400 crore with other banks and Rs 186 crore has been through bonds.

Funds to the tune of Rs 250 crore are coming from the government along with the multilateral and bilateral agencies. Another Rs 400 crore is being planned out of the company's internal accruals and with Rs 500 crore coming from SBI, its borrowings targets for the current year would be met.

It may be recalled that out of its RIBcollections, SBI has extended Rs 1,000 crore each to the Industrial Development Bank of India (IDBI) and the Industrial Finance Corporation of India (IFCI) respectively. A sum of Rs 500 crore has been given to the Infrastructure Development Finance Corporation (IDFC) and Rs 100 crore to Hudco.