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OBUs in SEZs will not be tax havens, says Maran

Commerce Minister Murasoli Maran said on Monday that overseas banking units in Special Economic Zones, allowed to be set up under the new Exim Policy, will not be tax havens and any suggestion to that effect is "totally wrong and completely baseless".

"It won't be tax havens and OBUs will function purely as offshore branches of Indian banks," Maran said, adding OBUs, a 'path-breaking' concept, would attract 'good money' to make SEZs more attractive.

The five year Exim Policy, announced on Sunday, allowed for the first time setting up of OBUs in the SEZs which would be virtually foreign branches of Indian banks within the country.

These OBUs would be exempt from Cash Reserve Ratio and Statutory Liquidity Requirements and would give access to SEZ units and developers to international finances at global rates.

The Reserve Bank will soon issue 'stringent guidelines' for setting up of such branches, Maran said.

There are already stringent laws on money laundering all over the world and "we too are on the verge of passing the Money Laundering Bill," Maran said.

Turning to poor export performance this year, Maran said the Policy has been prepared with the 'dismal picture' in mind and expressed confidence that turnaround was expected after the first quarter with signs of recovery in the US economy.

"So we are all hoping that better picture emerges after the first quarter," Maran said quoting statistics that most of the emerging economies in Asia including China have recorded poor and negative growth.

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