Govt for new category of bank credit to SEZs

The government today said it has asked Reserve Bank of India to consider creating a new category of bank credit for Special Economic Zones.

RBI had issued guidelines on banks' exposure to entities for setting up SEZs or acquisition of units in SEZs on September 20 this year, Minster of State for Finance Pawan Kumar Bansal told Rajya Sabha in a written reply.

He said, under these present guidelines, such exposure of banks would be treated as exposure to commercial real estate sector with immediate effect. Banks would have to make provisions as also assign appropriate risk weights for such exposures as per the existing guidelines, he added.

According to analysts, these guidelines would make lending to SEZs expensive. However, Finance Minster P Chidambaram has said it is yet to be seen whether loans to SEZs would infact become dearer since SEZs are yet to start functioning.

In another reply, Bansal said the government would launch a pilot project 'Refund Banker' to ensure income tax refunds were returned in a fast and transparent manner.

Under the scheme, the designated bank would issue refund either through a cheque or direct credit in the bank account of the taxpayers.

To a question about overall growth of the insurance sector, Bansal said, as reported by insurance regulator IRDA, it had grown 44.24 per cent during 2005-06, against 36.4 per cent in 2004-05.

In another reply, he said there was no proposal to exempt senior citizens from payment of income tax on interest earned by them on fixed deposits.

Exemption of tax on their savings bank account up to a limit of Rs 15 lakh per annum, is currently under consideration, he added.

When asked if the government had any plans to impose security check for FDI inflow and legislative law to screen investments, Bansal said no decision had been taken in this regard.