The Reserve Bank of India and other regulatory bodies, including SEBI and Insurance Regulatory and Development Authority of India, have reportedly brought under scanner 22 top private and public sector companies to monitor their intra-group financial transactions with a view to ensuring their stability. The companies include the biggest names in corporate India, such as the Reliance group, Tata group, Bajaj, Kotak, Citicorp, ICICI and GE Capital, besides public sector giants like SBI, LIC etc where large intra-group financial transactions take place.

The move, incidentally, puts in a broader perspective the corporate governance issues raised lately by RIL vice-chairman and managing director Anil Ambani concerning various financial transactions of Reliance Group companies. Clearly, RIL is not the only company with multi-layered subsidiaries and any corporate governance issue has to be examined in the context of the practices followed hitherto.

The J J Irani committee, which is expected to advise the government on a new company law, is also reported to be examining whether suitable amendments can be made to ensure greater transparency in the structure of ownership of those subsidiaries, which do not get reflected adequately in the companies' balance sheets.

According to some observers, however, the issue is not all that simple. Investment companies promoted by cash-rich companies have an important role in mobilizing additional funds for business development and diversification.