Call For Review Of Rbis Group Approach Policy

The Associated Chambers of Commerce and Industry (Assocham) yesterday suggested a review of the "group approach" policy by the Reserve Bank of India to facilitate financial accessibility to infrastructure projects set up in collaboration with foreign partners.

In a note submitted to Bimal Jalan, RBI governor, Assocham president Shekhar Bajaj said after the announcement of the New Industrial Policy, various infrastructure projects requiring huge investment had been set up by industrial houses with foreign investment, but the rigid view of banks while implementing the group approach was curtailing speedy implementation of the projects.

"The institutions and banks are taking a rigid view while implementing the RBI guidelines, and therefore the group approach policy of the RBI is becoming a hurdle for speedy implementation of new projects in the infrastructure sector," Bajaj said in a statement.

 

Bajaj said the policy was formulated to enable recovery of dues to banks and financial institutions from a healthy company belonging to a group on account of defaults by another company in the same group and in case of wilful default or where the defaulters did not cooperate with the financial institutions for repayment of dues.

"While implementing the group approach guidelines of the RBI, the banks and financial institutions are taking blanket view and denying financial facilities to even new companies not directly controlled by the so-called group," he said.

Assocham has demanded review of the policy by the government to facilitate financial facilities to new ventures, particularly in the infrastructure sectors which required huge investment.