"Let them, if they can, take advantage of their parent's formidable reputation and get cheaper funds abroad, and then take the risk of the rupee weakening. Why should they be allowed to use cheaper Indian funds to undercut Indian companies", said the official. GE Capital's office in Gurgaon said that they had not heard from the FIs on the matter. Nor did GE wish to comment on whether it was undercutting local NBFCs, other than saying that it was setting new benchmarks. In the last five years GECapital's local outfit has an asset base of over Rs 3,000 crore. Today, GE lends to most top Indian corporates, and is able to get deposits at rates which are at least a couple of percentage points lower than those which local NBFCs have to pay to attract deposits. Of this, around Rs 300 crore has been lent to GE by local FIs at interest rates of around 13 % or so. In addition, UTI and ICICI have also bought GE's debentures, though it is not clear if they still have them, or have traded them. Assuming that the FIs take the ministry's suggestion seriously -- they may not since they do not have too many high quality borrowers right now the direct impact on GE Caps is not likely to be very significant. Of its Rs 3,000 crore of deposits, just around Rs 300 cr are from the FIs.

What could be a lot more serious is the ministry's view on the means by which GE Caps is raising funds at a relatively lower rate than that being offered by other cos.