"IDBI's board has decided to enter into three areas in cross-border financing. To start with, the the institution will extend term loans to Indian companies wanting to set upt factories abroad and require foreign currency loans for this purpose," IDBI chief general manager KK Rao told The Financial Express.

"IDBI is also looking at initiating merchant banking and loan syndication activities abroad. Apart from these businesses, the institution will also look at picking up equity stake in Indian companies setting up subsidiary or associate companies abroad in case the company needs equity participation," Rao added.

"The business of cross-border financing is permitted under the IDBIAct and the government has also expressed the desire that IDBI spreads its business beyond the national frontiers," the chief general manager said.

Currently the term-lending institution's international exposure is limited to foreign currency borrowings to the tune of Rs 11,121 crore and foreign currency loans and advances totaling to Rs 7,598 crore as on end-March, 1999. The foreign currency loans are presently extended only to the domestic players for their operations in the country.

The IDBI Act permits the DFI to provide consultancy and merchant banking service in or outside India, granting loans and advances for the execution of turn-key projects outside India by any industrial concern or by any person in India and granting loans and advances to any person outside India.