Home / Knowledge / News / ASSOCHAM urges RBI to cut CRR, REPO Rate
ASSOCHAM urges RBI to cut CRR, REPO Rate
03
Oct '08
Reduce CRR and repo rate by 1%, permit banks to borrow against government securities and provide dollars directly to oil companies rather than routing them through market for buying crude oil are some of the key recommendations of Associated Chambers of Commerce and Industry of India (ASSOCHAM) submitted to RBI to enable it pump in enough liquidity in market.

The recommendations submitted to RBI Governor by the ASSOCHAM President, Mr. Sajjan Jindal further points out that there are several Indian companies now looking for rupee funding as dollar financing is uncertain and is also not possible to raise within the RBI approved spreads.

The level of credit is therefore required to be redefined taking into account the base effect while planning for the future instead of squeezing the credit which will have serious impact on the survival and sustenance of the industry.

The ASSOCHAM representation also stressed that in its future credit policy, the RBI not only curtail CRR and repo rate by 1% so that Indian Inc's borrowing is facilitated to fund its capacity expansion plans.

The RBI should usher in a new era in which oil companies are directly provided dollars in advance so that these are able to hedge their crude purchases in a smooth manner. Currently, the practice is that the oil companies get dollar through different channels in markets.

Likewise, the commercial banks should be permitted to borrow against government's securities as it increases their credibility.

The suggested measures have become necessary so that Indian industry comes out of liquidity crunch. Currently, the cost of money at which Indian industry borrows varies between 25-28% which is very high as a result of which its margins have already shrunk.

Another suggestion made by the President ASSOCHAM comprise that the banks should consider relaxing interest rates on foreign currency deposits and RBI should divert part of its foreign currency reserves as deposits with Indian banks instead of investing in foreign government treasuries with a condition that these funds should be used only pre and post shipment credit for exports.

The Chamber has also sought easing of norms that govern External Commercial Borrowings to help industry raise funds. It has also recommended that RBI should relax the norms relating to lending to the market intermediaries to avoid the liquidity crunch.

The erosion of money from the stock markets at time of heavy selling pressure by foreign investors lead to liquidity tightening which only makes the situation worse,

The price and supply conditions may get worse if the Reserve Bank of India resorts to raising interest rate to control the spiraling inflation and the move would not only hurt the industry but also the consumers, pointed out ASSOCHAM assessment.

It holds that interest rates or tightening the liquidity through cash reserve ratio would not help as the problem does not lie with the quantum of money floating in the economy.


Must ReadView All

Courtesy: ABARES

Textiles | On 13th Dec 2017

Australian cotton production to grow 4% in 2017-18: ABARES

Cotton production in Australia is forecast to rise by 4 per cent to...

Global economy now growing by about 3%: UN

Textiles | On 13th Dec 2017

Global economy now growing by about 3%: UN

There is an upturn in the global economy, and it is now growing by...

Clothing prices rise 3% in November in UK market

Apparel/Garments | On 13th Dec 2017

Clothing prices rise 3% in November in UK market

As post-Brexit referendum currency adjustment continues, prices of...

Interviews View All

Dharmendra Shah
Ozone PB Spintex Limited

‘We have made huge investments to ensure quality yarn production.’

Abhishek Samdaria
Reflete

GST will certainly reduce a lot of paperwork in future

Cindy McNaull
Cordura

We have broad range of options in durable fabrics

Urmil Arya

Sushila International, a well established textile organisation established ...

Vikas Banduke

Softech Controls Private Limited (SCPL) is a part of the Cotmac Group, an...

Rikesh Mistry

Jupiter Comtex Pvt Ltd, established in 1973, started its textile machinery ...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Urs Stalder
Sanitized AG

Urs Stalder, CEO, Sanitized AG, talks about the increasing use of hygiene...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

Aditi Somani
Aditi Somani

Aditi Somani specialises in luxury fusion wear with international cuts and ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

December 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
69.6%
No
12.0%
Skip
18.5%

Total Votes: 92

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
62.0%
No
30.4%
Skip
7.6%

Total Votes: 92

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.0%
No
9.8%
Skip
3.3%

Total Votes: 92

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
81.5%
No
8.7%
Skip
9.8%

Total Votes: 92


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search