Reflecting its reservations on the policy for special economic zones (SEZ), Reserve Bank of India today ruled out any concessional finance to developers and units in these zones saying they should be treated on par with realty projects.The apex bank also directed nationalised banks to offer credit to SEZs on the same terms and conditions as offered to real estate developers. "Like any other land, SEZs are real estate," Y V Reddy, Governor of RBI, said today."Keeping in view the current market conditions, it has been decided that the exposure of banks to entities for setting up SEZs or for acquisition of units in SEZs, which includes real estate, would be treated as exposure to commercial real estate sector with immediate effect." the RBI said in a notification last night. RBI had recently expressed reservations about the concessional tax regime for SEZs saying this would take away resources from other areas and lead to uneven development.RBI's views lend support to apprehensions expressed by the finance ministry that SEZs would lead to massive revenue loss to the exchequer due to various sops given to 150 SEZs already cleared and 225 others that are pending.The IMF, too, cautioned India last week to take a second look at its SEZ policy saying tax sops may divert a lot of activity from the rest of the economy into these zones creating problems of inequitable regional development.Also Read: RBI makes loans to SEZs costly
