Industry urges RBI Governor for interest rate cut to boost growth

Mumbai, Jan 17 (IANS) Ahead of the Reserve Bank of India's (RBI) monetary policy review early in February, India Inc on Thursday urged the central bank to cut its interest rate and the cash reserve ratio (CRR) in order to boost growth.

Thursday, January 17, 2019 | 8:30:07 PM IST (+05:30 GMT)
 0 Comments | By

Mumbai, Jan 17 (IANS) Ahead of the Reserve Bank of India's (RBI) monetary policy review early in February, India Inc on Thursday urged the central bank to cut its interest rate and the cash reserve ratio (CRR) in order to boost growth.

In a meeting here with the new RBI Governor Shaktikanta Das, who will preside over his first monetary policy committee (MPC) meeting on February 7, leading industry chambers also suggested various measures to ease the ongoing liquidity crunch and reduce the high cost of credit, according to statements issued by the industry bodies.

"The Federation of Indian Chambers of Commerce and Industry (Ficci) urged the RBI today (Thursday) to consider cutting the repo rate and CRR to enable lowering of lending rates by banks," a statement said.

"Ficci President Sandip Somany said reduction in the repo rate and CRR would help in reviving the investment cycle in the country and will also boost consumption and support growth.

"Some of the other important issues discussed at the meeting included NBFC's (non-banking finance companies) liquidity concerns, measures required to streamline and boost MSME (micro, small and medium enterprises) financing and steps needed to push export-led growth," it added.

The Confederation of Indian Industry (CII) suggested a cut in the RBI-mandated CRR for banks by at least 50 basis points (bps) to facilitate flow of credit to industry, especially to MSMEs, and steps to reduce the high cost of credit, like a reduction of 50 bps in the repo or RBI's short-term lending rate for commercial banks.

The chamber pointed out in this regard that that the inflation rate has been consistently low over a number of months.

"On measures to address the financial challenges faced by the MSMEs, CII suggested that RBI consider limiting the collaterals sought by banks to 133 per cent of the exposure and eliminate the need for personal guarantees where sufficient collateral exists," a statement said.

The recent appointment of Das, who had retired earlier as Economic Affairs Secretary, was preceded by the abrupt resignation of Urjit Patel as the RBI Governor, following a period of tension between the government and the central bank.

The government's differences with the RBI centred on four issues - the former wanted liquidity support to head off any credit freeze risk, a relaxation in capital

requirements for lenders, relaxing the prompt corrective action (PCA) rules for banks struggling with accumulated non-performing assets (NPAs) or bad loans, and support for MSMEs.

The industry chamber Assocham delegation told the RBI Governor that in order to ensure a steady growth rate of 7.5 per cent, the economy needs credit loosening so that liquidity can sustain the growth.

"The fund raising capability of NBFCs/HFCs (housing finance companies) has reduced significantly, warranting support from the government. They need to be provided alternate options for raising funds. This is imperative not just for the health of NBFCs/HFCs but for sustaining the GDP growth rate as well," Assocham said.

Assocham brought to the Governor's notice that sectors like textile, handicraft and leather goods need to be given interest subvention to boost their export capabilities and rate of interest subvention should be increased from three to five per cent, the statement added.



Copyright : Indo-Asian News Service
User Rating Rating(0 Votes)

Share On :

Share on Facebook Share on Twitter Share on Google+ Share on WhatsApp

To stay updated with similiar articles follow

User Comments & Ratings

Join India Forums for free to comment on this story. Have an account already? Use Quick Login to comment.
Dear Readers,
  • Please do not use derogatory comments in reply to the stories published on Telly Buzz, India-Forums.
  • The credibility of the site matter to us, and the comments in bad taste tend to invariably hurt the actors/production house/channel etc.
  • So kindly, refrain from creating an unhealthy atmosphere for all, and keep your comments constructive.
  • Also, please use the Rate It button if you want to just thank the author for posting the story.

Articles in National, Business

Art - Culture Business Diaspora
Education Health Politics
Religion Sports Sci-Tech


Asia America Australia
Africa Europe Gulf-Middle East
Pakistan Nepal Bhutan
Sri Lanka Bangladesh Maldives

Disclaimer: All Logos and Pictures of various Channels, Shows, Artistes, Media Houses, Companies, Brands etc. belong to their respective owners, and are used to merely visually identify the Channels, Shows, Companies, Brands, etc. to the viewer. Incase of any issue please contact the webmaster.

Popular Channels :
Star Plus | Zee TV | Sony TV | Colors TV | SAB TV | Life OK

Quick Links :
Top 100 TV Celebrities | Top 100 Bollywood Celebs | About Us | Contact Us | Advertise | Forum Index