ICICI Bk cautious about lending to SEZs: Kamath

K V Kamath, CEO and managing director of ICICI Bank, today said the bank would wait for the government to remove the cloud of uncertainty surrounding special economic zones(SEZ) before deciding on lending to such projects.

"The bank will wait for the present uncertainty to settle down and greater clarity to emerge," Kamath said.

The Reserve Bank last week directed banks to treat loans to such zones on par with lending to the realty sector - a decision aimed at limiting the exposure of commercial banks to SEZs.

The decision prompted Commerce Minister Kamal Nath to criticise the central bank for what he said was an "inconsistent approach" toward SEZs. He pointed out that RBI had, in its annual report, applauded the SEZ scheme for accelerating economic development. "The RBI in its report had itself termed SEZs as engine of growth," Nath said.

The commerce ministry is of the view that such zones would stimulate investments and earn Rs 44,000 crore in revenue for the government in a year.

The finance ministry, however, estimates suggest that SEZs could lead to a potenial revenue loss of Rs 1,75,000 crore in direct taxes, customs and excise duties over the next five years.

The IMF, too, had cautioned India to have a second look at the SEZ policy saying it could lead to uneven development.