My understanding is that internal accruals refer to shareholders equity. How exactly do you fund growth by that? Should you be using cash on the balance sheet to fund growth instead?
Yep. The parents like to do it because of high leverage effect which strongly affects ROE.
However, if a particular unit is high above average related to other BUs in cash and profit generating and there is a some strong project, BU managers are temporary permitted to retain earnings and use earned cash for financing the project.