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Govt. to Review RBI’s Stand on SEZs Financing
| March 9, 2007 |   (2 votes, average: 3 out of 5) Loading ... |
The RBI’s view of treating bank financing of Special economic zone (SEZ) projects in India at par with commercial real estate, which drew criticism from Commerce & industry minister Kamal Nath, will be reviewed by the Indian government.
The Prime Minister’s office (PMO) has asked the issue should be handed over to the empowered group of ministers (eGoM) on SEZs to look into the matter.
The eGoM on SEZs, headed by Foreign Minister Pranab Mukherjee, has been asked to look into the matter and is expected to call a meet this month to decide on the changes to be made in the SEZ policy and put an end to the freeze on notifications and fresh approvals.
It all started, when RBI had asked all banks in September last year to treat loans for setting up SEZs or for acquiring units in SEZs at par with lending to the real estate sector. Many saw this move to be aimed at restricting banks from financing firms on SEZs.
Treating bank financing SEZs in India means companies that are taking loans for SEZ projects will have to shell out higher interest rates. Where as, these SEZs projects anywhere in India come under infrastructure projects that attract less interest rates.
The issue was first highlighted by the Commerce & Industry Minister Kamal Nath, who had slammed the move, saying it that it will have negative impact on all those national and international companies who are queuing up for Indian SEZs.
He even sent a letter to the PMO in this regard.
So far, of the 173 SEZs who own land are affected by the freeze. Of which, around 50 have completed all the formalities. Following allegations of land-grabbing by developers and violent protests in West Bengal, the eGOM had stopped sanctioning fresh notifications and approvals of SEZs from January 22.
Seeing the projects getting stucked in between, many Indian and foreign investors have approached the Indian government to end the tussle. Not only that, even PMO has got letters from many states against the freeze.
News Published Under: Special Economic Zones |
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