RBI may not treat banks' loans for SEZ units as CRE exposure
Reserve bank may not treat banks' advances for buying units in Special Economic Zones as exposure to commercial real estate, a move which is different from its earlier decision in 2006 that sparked protests from SEZ players.
By PTI |
MUMBAI: The Reserve bank may not treat banks' advances for buying units in Special Economic Zones as exposure to commercial real estate (CRE), a move which is different from its earlier decision in 2006 that sparked protests from SEZ players.
RBI had included these loans in CRE exposures in 2006 in order to prevent speculative dealings in such units.
"Since there are restrictions on transfer of such (SEZ) units and require Government permission, the speculative activity in sale and re-sale of units is unlikely to be there. Therefore, such cases should be more like financing of industrial units or the projects and if such is the case, these may not be treated as CRE Exposures," RBI said in its draft guidelines.
However, the central bank may continue to treat exposure to land acquisition for developing SEZs as lending to commercial real estates, a move opposed by SEZ developers since it makes these advances costlier.
RBI had included these loans in CRE exposures in 2006 in order to prevent speculative dealings in such units.
"Since there are restrictions on transfer of such (SEZ) units and require Government permission, the speculative activity in sale and re-sale of units is unlikely to be there. Therefore, such cases should be more like financing of industrial units or the projects and if such is the case, these may not be treated as CRE Exposures," RBI said in its draft guidelines.
However, the central bank may continue to treat exposure to land acquisition for developing SEZs as lending to commercial real estates, a move opposed by SEZ developers since it makes these advances costlier.
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