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Enron's Indian lenders spooked by pull-out threat

Shares of Indian institutions with exposures to the troubled Enron power project were weak in a steady Monday market as investors were rattled by the US power giant's first step to pull out of India at the weekend.

Wholesale lender Industrial Development Bank of India crashed 10.1 per cent, New York Stock Exchange-listed ICICI Ltd plunged 7.1 per cent and State Bank of India, India's biggest commercial bank fell 2.0 per cent.

By 1158 IST, IDBI recovered to Rs 24.75, off Rs 24.40 low, but down 8.84 per cent. ICICI had climbed back to Rs 85.90, off Rs 83.05 and SBI recovered to Rs 234.30, down 0.80 per cent, off Rs 231.50 low.

The benchmark index was flat.

Dabhol Power Corporation, 65 per cent owned by Houston-based Enron Corp, on Saturday issued a preliminary notice to terminate its contract to sell power to Maharashtra State Electricity Board.

Local lenders like the IDBI, ICICI and SBI stand to lose if Enron, India's largest foreign investor, pulls out.

They have lent $1.4 billion out of the project's total cost of $2.9 billion.

"The sentiment is downbeat on these stocks over concerns that their sticky loans would rise if Enron pulled out," said a banking analyst at a foreign brokerage.

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Enron moves towards ending Dabhol deal: Reuters

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