Reliance Infocomm has approached domestic banks and financial institutions to raise around Rs 5,000 crore (Rs 50 billion) debt with a tenure of eight years for financing its expansion and roll-out plan.

Executives in banks and financial institutions told Business Standard the company was offering to avail of the credit facility at an interest rate of around 4-5 per cent. They added that banks were in the process of forming a consortium for lending to Reliance Infocomm.

The company did not respond to a questionnaire from Business Standard. When contacted, a Reliance Infocomm spokesperson said, "As a policy, the company does not comment on speculative reports."

Company sources, however, said certain proposals had been made to lenders which were under discussion. They, however, refused to divulge details.

Bankers said the proposal was received a few weeks ago and they were yet to take a decision. According to them, ICICI Bank, the State Bank of India, Industrial Development Bank of India and Life Insurance Corporation are expected to take a larger share in the debt programme, while some nationalised banks will take smaller exposures of below Rs 500 crore (Rs 5 billion).

Reliance Infocomm's total project cost is estimated at Rs 18,300 crore (Rs 183 billion). The company has a capital base of Rs 3,000 crore (Rs 30 billion) and has issued preference shares, though the amount of these shares is not known. Of the eight-year tenure, the company might get a moratorium of one year, bankers said.

They added that the company would require a large fund infusion to expand its footprint across the country.

Expanding agenda

• Debt may carry 4-5% interest rate. 
• Spread over 8 years, including one year moratorium.
• Talks on with ICICI Bank, SBI, IDBI and LIC.
• Project cost is Rs 18,300 crore, company's capital base Rs 3,000 crore.