Inter-corporate investment norms soon

New Delhi, Oct 27: Transparency in operations will be the guiding principle and top priority in the new guidelines to be issued shortly o...

New Delhi, Oct 27: Transparency in operations will be the guiding principle and top priority in the new guidelines to be issued shortly on inter-corporate investments, Union Finance Minister Yashwant Sinha said today.

Asked about the Union Cabinet’s decision on freeing inter-corporate investments from Government approval, he said “Our desire is to see that a facility made available to meet a certain situation is not misused.” The new guidelines would be issued soon, he told mediapersons on arrival at the Chennai airport.

“The Companies Act permits inter-corporate loans upto 30 per cent and investments upto 30 per cent. We are going to raise these limits.” Sinha said the criticism by the Congress that the proposal to allow buy-back of shares was more beneficial to promoters than share-holders was because they could not do it. “The decision of the Government was based on the long-pending demand. They should do their homework,” he retorted.

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On why the response of the stock markets to the new economicpackage appeared to be below the expected level, Sinha said the Government had done what needed to be done. It would now wait for the markets to determine their own course of action.

About the contradictions between Prime Minister Atal Behari Vajpayee’s announcement that Rs 28,000 crore would be spent on a huge national highway project, which might involve greater public spending, and the finance ministry’s stated aim of reducing the fiscal deficit to about three per cent, Sinha said there was some misunderstanding on the issue.

Sinha clarified that the prime minister did not suggest that the entire amount would be spent in a single year nor does his own aim to bring down fiscal deficit to three per cent mean that it would be achieved this year itself.

A national highway of such a magnitude could not be built in a single year. The finance ministry had provided for Rs 500 crore this year to the National Highways Authority of India (NHAI), while another Rs 800 crore would be raised through the cess onpetrol. The amount already with the NHAI could be leveraged to start the project, on which work would commence in 20 different places this year, Sinha said.

New prudential norms for NBFCs on anvil

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CHENNAI: The Finance Minister said norms governing Non-Banking Financial Companies (NBFCs) would have to be `revisited’ and new prudential norms evolved to protect the interests of investors.

“While protecting the interests of investors, we will ensure that NBFCs are not killed,” Sinha said.

When his attention was drawn to the problems faced by investors in NBFCs, the Finance Minister said a committee headed by the Special Secretary (Banking) in the Finance Ministry had gone into the issue and was expected to submit its report shortly.

On ASSOCHAM’s appeal that public sector disinvestment should not be delayed until the primary market recovered, Sinha said the disinvestments were already on. “It is immediately materialising.”

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About the divestment in the national carriers, Indian Airlines andAir India, he said the Government had to strengthen the companies first so that they came out of their present problems.