FinMin writes to RBI in support of ADAG's borrowing plans

Finance Ministry is understood to have supported Anil Ambani group's plans to raise $1.1 billion of overseas loans for power business and suggested to the Reserve Bank of India (RBI) that entities should not be denied a nod on account of alleged violations by end use of funds by other group firm.

Anil's group firms had sought permission to raise over Rs 5,000 crore for two power projects and in this connection are understood to have approached the Finance Ministry.

The group spokesperson could not be reached for comments.

Following the representation made by the group having interests in telecom, infrastructure, entertainment and financial services, the Finance Ministry has asked the central bank to reconsider their proposal for raising over Rs 5,000 crore of loans from foreign markets.

The RBI had earlier said that the application could be considered only after resolution of ongoing investigations into alleged violation by some ADAG firms of guidelines related to use of foreign funds.

Upon RBI's objection to grant of approval for raising $550 million each for sourcing of capital goods for the group's Rosa and Vidharba power projects, ADAG told the Ministry and argued that such approvals could not be denied for an entity, for want of resolution of alleged violations.

It argued that a blanket bank on the entire group would lead to the various other group companies being unable to arrange funds for projects of national importance.