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Environment Support Group ® S-3, Rajashree
Apartments, 18/57, 1st Main Road, S. R. K. Gardens,
Jayanagar, Bannerghatta Road, Bangalore 560041.
INDIA Telefax:
91-80-6341977/6531339 Email: esg@bgl.vsnl.net.in Website:
http://www.altindia.net/esg/index.htm Regd. Post/Ack
Due
Ms. Usha Turat Chief General
Manager Industrial Export and Credit
Department Reserve Bank of
India Central Office, 12th
Floor Central Office
Building Mumbai 400 001
14 March 2003 Ref.:
Letter
dated DBS (MRO) No 1727/17.21.25/2002-03 dated 25 October 2002 and RBI
Case No. 105/16.8.2002; Our letter to you dated 28 November
2002 Reg:
Violations of RBI Circular No. IECD No. /08.12.01/2001-02 dated 20
February 2002 by financiers of the Bangalore-Mysore Infrastructure
Corridor Project (BMICP) Dear Ms.
Turat, In our
letter to you dated 29 November 2002 we had urged you to take necessary
action per our RBI Case No. 105/16.8.2002. As we had no response to this, we
called you on 15 January 2003, when you informed that Ms. Rosemary is
investigating the case. We
have heard no further on this matter since. It is
reported in today’s newspapers that financial closure has been achieved on
12 March 2003 by M/s Nandi Infrastructure Corridor Enterprise for the
Bangalore Mysore Infrastructure Corridor Project (BMIC). The report is based on a statement
made by Mr. R. V. Deshpande, Karnataka Minister for Large and Medium
Industries, in the Karnataka Assembly, in response to a question. We are enclosing a copy of this
report, as reported in Deccan Herald dated 14 March 2003, for your perusal
and records. We fear
that the financial closure is in violation of RBI Circular No. IECD No.
/08.12.01/2001-02 dated 20 February 2002, which is the basis of our
complaint. Considering that RBI is
investigating the case against ICICI for potential violation of the
Circular, it would have been appropriate that the financial closure should
have been kept in abeyance, pending closure of RBI
investigations. This is
not the case as is presently reported. We bring this matter to
your attention and urge you to consider investigation of our complaint on
a priority basis, especially legal and financial implications of the
financial closure, and take action per law for violation of the said
circular. In this regard we
wish to highlight ongoing efforts of RBI warning lending agencies against
supporting projects on the basis of State Government Guarantees. A copy of
such a report from Deccan Herald dated 25 February 2002 is enclosed, where
it is reported that RBI “has asked the commercial banks and financial
institutions to refrain from granting project financing based on State
Government guarantees. The
lending should be based on commercial viability and
bankability”. ICICI
financing the BMIC project is a case wherein State guarantees form the
basis, and thus, in our opinion, violate the RBI circular. We hope you will consider this
request in 15 days, for otherwise we may be constrained to take such
action as we deem fit in seeking relief on this public interest
cause. Thanking
you, Leo F.
Saldanha
Rajmohan Pillai Coordinator
– ESG
ESG – Infrastructure Finance Research Encl.: As
above Cc:
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